Soybeans rise again overnight, Brazil forecast is concerning.
This morning’s grain trade has soybeans sharply higher with the building concern of the Brazilian bean crop weather, while corn holds steady firm, and wheat softens on Russia’s stagnant wheat pricing. Threatening weather in South America has soybeans building premium. Russian FOB wheat prices are holding steady and have been persistent for weeks. Additional export demand is needed to sustain any price recovery, while Australia’s wheat crop continues to remain sharply reduced.
Friday’s COT report showed managed money was extremely short on wheat and corn while holding a small long in soybeans as Friday’s close of 30,000 contracts. They are long 114,000 contracts of soybean meal while almost flat in soybean oil.
The USDA Crop Production and Supply/Demand Report is out on Thursday. Traders estimate a corn yield of 173.2 bpa vs 173 bpa in the last report, and the bean yield unchanged at 49.6 bpa. The report will likely see a 160 Mil pound cut in soy oil ending stocks for the 2022/23 crop year that ends as of September 30.
In Brazil, it’s anticipated that 51% of the soybean crop is planted versus 57% last year. In Mato Grosso in the north, 83% is planted compared to 93% a year ago. It’s estimated right now that 20-35% of the crop will get replanted, which will push the winter corn backward into mid-March or later. This is the slowest Brazilian soy seedings since 2020. Some needed rainfall is anticipated on November 10, which, if it occurs, will trigger the replant.
The South American weather forecast shows no change with prior models, and below normal rainfall pattern looks to continue across the northern two-thirds of Brazil, with above normal temps in the 90s/100s due to the stock high-pressure Ridge. Meanwhile, above-normal rainfall will drop across Southern Brazil due to a fast-moving jet stream and low-pressure trough. The 11-15 day forecast shows no change in the pattern, which extends now into November 20. The Brazilian weather pattern continues to build worry of a lasting drought.
Live and feeder cattle futures closed higher on the week but retreated on Friday as they cannot close above the 50-day moving average for December cattle. Meanwhile, cash trends held firm, with sales in all regions going $1 higher at $185. Sales in the north or within a tight range have held since early September, while sales in the South were just under the record highs that were traded in early June. Slaughter last week came in at 632,000 head, down 4000 from the previous week and lower by 36,000 head than a year ago. Box beef values dropped last week on the Choice by $5, and Select lost $8. Both are still at record levels for November.
December live cattle need to close above the 50-day MA, presently at 184.86, but more importantly, the downtrend line from the high’s crosses at 185.20. Until this is cleared, technical selling from the funds can still materialize as they liquidate.