Wheat leads overnight gains, a reverse of yesterday.
Grains are mixed this morning, with wheat leading the advance, on rumors of possible Chinese buying of SRW wheat out of the PNW. The corn and soybean harvest should advance quickly over the next 10 days on a warm/dry trend that should persist, while the Mississippi is benefiting from recent rains lowering barge rates.
The new month should bring new attention to South America, as Brazilian weather continues to see too little rain across Mato Grosso, Goais, Mato Grosso do Sul, while another round of flooding raindrops across Río Grande do Sul, Santa Catarina, and Parana. The pattern needs to change by mid-November, or the Brazilian soy and corn crop estimates will start to decline. A large part of the selling that the grain market has experienced in beans and corn in the last few months is the anticipation of a record harvest coming from Brazil in the first quarter of 2024. It now appears the US export season for corn and soybeans could extend deeper into the first part of 2024.
StoneX stopped yesterday’s big tender of 438 November receipts by Cargill. Open interest in November soybeans is now down to 2873 contracts. This means strong hands will soon emerge for the remaining deliveries.
Ukraine is following through with its announced mandatory food export company registration to prevent tax evasion in key Ag exports. Abuses of tax avoidance have been widespread, and it’s also used to repatriate Ukraine’s currency. They are in dire need of money to fund the war. Ukraine’s grain exports were down 50% in October. There is little change moving forward for the Brazilian weather forecast, with the north dry and the South experiencing above-normal rain. The US and EU weather models agree in this forecast that continues through the next 10 days. High temperatures in the north will range in the 90s to lower 100s, with 70s and 80s in the South including Argentina. Argentina will receive normal rainfall of .5-2.50” of rainfall.
Live and feeder cattle enjoyed a firm trade yesterday, with a steady opening anticipated today. The overall tone from the cattle price outlook remains firm, with October live cattle expiring at $183.75 versus $146.77 last year. This was a record expiration for all CME cattle contracts. Negotiated fed cattle trade is still quiet on limited demand, while the trade is expecting at least steady money this week. Offers on Tuesday were quoted $2 higher in the South at $187. Box beef prices tumbled sharply on Tuesday, with Choice giving up $4.10 at $305.18 and Select was lower by $1.39 at $279.50. Note that the choice rib primal is 20% higher than a year ago and at a new high for the year, a record price for early November. December live cattle have recovered much of the post-COF losses and closed the chart gap on Tuesday.