Wheat lower, while soybeans catch a bid despite deliveries.

Grain futures are lower this morning, led by wheat. Soybeans had declined 7-$0.10 overnight before recovering back to steady, as Cargill put out 438 soybean receipts for deliveries with no strong stoppers. Cargill also put out receipts back in October for soybean meal and in September soy oil futures. Some wonder if they are doing this to test the market for the weakness of first-notice day delivery intentions. The market will be looking for strong hands to pick up the November soybean receipts.

Yesterday, the NASS showed Crop Progress for corn at 71% harvested, beans at 85% harvested, and winter wheat at 84% planted and 47% G/E. The ratings for wheat are about average for the past five years, but the last two years have pulled that average down a bit.

In China, it is estimated that 20% of the wheat crop was damaged by excessive moisture this season. It is reported that they expect to import around 12.0 MMT of wheat, eclipsing the record 9.9 MMT in 2022. According to trade sources, 20% of their wheat harvest is poor quality. After recent purchases, there is the potential for another 6-8 MMTs of open Chinese demand, with Australian wheat supplies cut by drought. The current weakness in wheat may find new Chinese buying interest as it approaches the 550 price range.

The abnormal South American weather pattern remains stuck for November, with additional heavy rains dropping across S Brazil/Paraguay, while N Brazil holds in a below-normal rain and above-normal temperature trend. October percent of normal rainfall shows minimal moisture for the main growing state of Mato Grosso, which produces 25% of Brazilian beans and 45% of their corn. Some weather forecasts are hinting that this pattern will likely stay in place for the end of the year. Within a couple of weeks, the world trade will likely wake up to the fact that a 163 MMT bean crop and a 129 MMT corn crop out of Brazil is not possible and that a reduction to well below last year’s crop will start to be in the making.

Live and feeder cattle pulled off a higher close on Monday with a steady outlook for this morning. Last week’s break is now given the appearance as overdone as the cash-fed cattle markets did not follow the break. Feeder cattle futures bounced yesterday, while the feeder cattle index fell $3.20 on Monday. Last week’s late-week recovery in the cash market reflected the leverage that cattle feeders still have on the current market. Packers had ample opportunity to acutely cheap futures contracts last week and may be willing to accommodate a further Recovery.

Last week, the average prime carcass brought $18.90/CWT premium versus choice carcasses. This compares to $32 last year. At the same time, select carcasses sold at $25/CWT under choice last week versus $30 under a year ago. Amid these record prices, it appears quality premiums suggest a shift in quality demand. The COT report reflects a significant transfer of ownership from the speculator to the Hedger in the form of feedlots covering hedges and Packers establishing new longs. November is known for sideways trading action, with December seeing strength into the new year for cash pricing.