Grains trade follow-through weakness overnight.
Soybeans were lower overnight, and a classic midweek two-day setback and what is the only bullish trend in the grain complex, while wheat and corn find willing sellers as they failed to break out of recent congestive trends. Soybeans decline is amid the prospect of showers in the northern 2/3’s of Brazil, which start late Sunday and persist through Thursday. This, along with soybeans having attained a challenge of $14 within a 34-day window from its October 12 low, is bringing in the selling.
Soybeans are currently correcting with potential rain coming next week, but long-term prognosticators of weather indicate that this is not a pattern change but more of an interlude, as “it still always rains in drought, it just never rains enough.” The current rally has been about soybeans and soybean meal, but it’s the soy oil stocks that are now the lowest in nine years and will continue to decline as new renewable diesel capacity comes online.
Sunday night is also important for the Argentine Presidential election amid as dire inflation rate and talk of dollarization that would add further pressure to the peso in a US holiday-shortened week with Thanksgiving coming up.
The US Senate overwhelmingly approved a stopgap funding bill to avoid a government shutdown. It will now go to President Biden’s desk for signature. This means there will be an extension of the 2018 farm bill for one-year, and we will continue to receive the next two crop reports, which include the final yield assessment in January. Yesterday’s NOPA reported a record monthly crush of 189.774 mbu vs expectations of 187.24 mbu. Soyoil stocks declined to 1.099 billion lbs vs estimates of 1.19 billion lbs. Soymeal futures open interest of 553K broke the previous October 2018 record.
Numerous daily records are being set in northern Brazil of 100 one-hundred and 12°, with no rain anticipated till Sunday-third of next week. Meanwhile, additional rainfall of .5-3.00” has dropped across Southern Brazil, which is adding to a running total this week of 2-7.00”. Scattered showers arrive late Sunday across N Brazil as the high-pressure Ridge relaxes. Showers persist into Thursday before the Ridge returns in another extended period of dry weather returns. The GFS remains the driest with rainfall of .5-2.50” in the 4-90. While the EU model suggests 1-4.00”. The mix of the two is likely, while the high-pressure Ridge holds across the north again in the 11-15 day period, implying that the current weather pattern is stuck.
Live and feeder cattle futures managed a higher close on Wednesday as the market continues to recover ahead of the November Cattle on Feed report despite the bearish expectations. December live cattle have close back above the 200-day moving average. Meanwhile, negotiated fed cattle markets remained quiet while there was some light trade in the north, which was down $5 on a dressed basis at $282.
Remember that we are looking for high placement numbers this week in the COF report, but we have one extra day, which adds 4.5% to the total, with the average guess coming in at nearly 107-108%. The October 1 feeder cattle inventory was estimated to be down 4% from a year ago, which will continue to trim placement rates in the months ahead. Beef demand through the next three months will determine box beef’s ability to improve fed cattle prices.