Turn-around Tuesday affects the commodity complex.

Turn-around Tuesday is welcoming most of the commodity markets lower, with soybeans rallying back from overnight weakness as South American weather is not showing any budging to current forecasts and flow, which is concerning for both corn and beans. There will be scattered rains in some areas, but not enough, while some areas in the south have had 30-35″ of rain in the last 30 days. Temperatures are soaring, which is contributing to evapotranspiration rates. The USDA attaché to Brazil lowered their 23/24 Brazilian corn crop forecast to 130 MMT from 135 MMT. CONAB will release its monthly update for Brazil crops on Thursday.

Overnight crude oil futures pushed lower to a low of 78.83 before bouncing modestly but is trading below 80.00 for the first time since August 25, as the dollar bounces modestly on FED minute notes being released, creating risk-off trading. Seasonally, energy usage retreats during November/December/January and the decline is seasonal, especially given no incidences are occurring in the Middle East, threatening any embargoes/reductions in oil production.

China is reported to have imported 5.16 MMTs of soybeans in October, which is 25% more than last year. It’s now anticipated that China will import up to 105 MMTs of soybeans in 2023, which is a record. Over a year ago, the USDA was barely giving it a chance of 99 MMTs. China has been importing massive amounts of Brazilian soybeans and corn in hopes of avoiding the US, but the weather in South America is going to cause China to become short bought with the availability of soybeans out of Brazil now delayed to late February/early March. And what if there is a crop shortfall? The USDA has slashed our exports to maintain a pipeline 220 MMT carryout. What if China needs to up its game and buy more US beans if the Brazilian crop gets cut to well below last year’s production? Our carryout would demand rationing and sharply higher prices.

Algeria and Jordan are now tendering for world wheat for December/January, with cash traders awaiting results. Russian wheat values are starting to show the prospect of firming with the onset of winter, making it more difficult to procure supplies. Russia continues to offer cheap wheat to the export market at $227/MT vs US soft red winter wheat at $259/MT.

Record dryness persists across the northern two-thirds of Brazil while the flooding continues to inundate S Brazil. Many climate scientists are starting to project Brazil’s adverse weather will persist into mid-December. The US/EU/Canadian weather models all agree in the two-week forecast, which raises confidence in the solution. The 11-15 day forecast also shows no change in the pattern, which extends heat and dryness for Brazil into November 21. Other than a few showers across far NE Brazil, rains across Mato Grosso were limited. These rains now start to dry up and have been less than .75″ with less than 30% coverage. Temperatures are maintained in the 90s to lower 100s across the drought-stressed N and C Brazil areas.

Live and feeder cattle broke down sharply on Monday and extended their losses substantially from last Thursday’s high. December cattle faltered last Thursday at the 50-day MA, while January feeder cattle also stalled at a sharp downtrend line, keeping the technical outlook negative. Negotiated fed cattle markets were quiet on Monday and a bearish tone is now being cast upon this week’s trade. Beef prices remain in retreat, with Choice on Monday down $0.62 and Select losing $1.65. The choice cutout is barely holding above $300, but a much deeper correction would likely follow a weekly close below.

Estimated slaughter margins last week were down $16/head at $69, which is near the annual lows that were set in September. The tight spread between beef and cattle is expected to limit cash market gains this week. Yesterday’s significant break was tied to rumors that Tyson may shudder one of its plants. If January feeders close below 233.50, it could lead to further significant losses, letting the air out of the market after peaking on September 15. Seasonally, feeder cattle peak September 1-September 15 annually and decline into late November. This year’s high was September 15.