Grains move higher on concerning searing heat for N Brazil.
Grain futures are higher this morning, again led by a sharply higher move in soybeans, which pushed to a new fall price recovery high of 1382.2 overnight before retreating slightly. Wheat and corn are also seeing recovery gains of 5-7 cents after corn rechallenged the September lows again yesterday within one tick. Again, the culprit is searing heat and the worsening of the drought in north and central Brazil. There is no change from this forecast over the next 10-12 days while more heavy rain drops on Santa Catarina and Río Grande do Sul in southern Brazil over the weekend.
There is a dramatic increase in concern for the Brazilian soybean crop in the northern two-thirds of the region where poor stands are going to create replanting which will delay the seeding of a second corn crop, or even switching some acreage over to cotton. Matto Grosso, the largest soybean and corn producer in Brazil, is also a cotton producer, so multiple pieces of equipment are available on many large farms. Whatever acreage gets moved to cotton, means no corn being planted on those acres after the beans would’ve been harvested. Just a 5% yield loss on Brazilian soybeans amounts to eight MMTs of beans, and a 10% yield loss is 16 MMTs. This would put the crop well below last year’s production.
China continues to buy US soybeans for December through February, with now reports that 600-700,000 MTs of beans have recently been purchased. Also, Algeria booked over 600,000 MTs of Eastern European/Russian/French wheat. There is doubt that Russia sold more than 420,000 MTs, as the winter timeframe is starting to tighten up.
USDA put out an early release of their 10-year baseline balance sheet projections used for government budgetary purposes. This showed 2024 corn acreage of 91 million with a 181 bpa yield, soybean acreage of 87 million with a 52 bpa yield, and wheat acreage of 48 million with a 39.2 bpa yield.
Argentina has a runoff election on the 19th that will be impactful, especially to beans, as the two rivals have entirely different philosophies as to how to address the country’s economic/inflationary woes.
The concern this morning for South American weather is the lack of rain, and extreme heat is getting attention with highs across Mato Grosso, Mato Grosso do Sul, and Goias, which we showed in yesterday afternoon’s video with multiple days of temperatures in the 100s and many temperatures in the 104-110 range. Producers wanted to re-seed soybeans, which is estimated to be anywhere from 25-35%, but now very poor stands have to wait for better chances of rain that may occur after November 20. If that occurs, a second corn crop is unlikely.
Live and feeder cattle continued their collapse yesterday with the weaker outlook offered this morning. Markets fell on steep losses as fund liquidation kicked in, crushing feeder cattle to losses of $5-6 while live cattle tumbled $2-4. Box beef values had choice losing $1.34 and has fallen back to near $300 and select was off $0.88. The negotiated cash market is yet to weigh in this week, while cattle markets in all regions were untraded with mostly limited demand.
The 200-day MA in December cattle is just below the market at $177, with the next level of support than at $172-173. Fed cattle supplies will be increasing on the November 17 report, with one extra day tabulation the last year (one day is equal to 4.5%) On feed is guessed at 102.4% while Placed is at 107.9%. Marketing is at 98.3%. If January feeder cattle fail to find support at present values, they target 224-225 on the January contract for this breakdown.