Volatile grain opening after Milei wins Argentine presidential election.
Indications last night for the grain futures was initially a higher start, but when it was announced by 6 PM CT time, Right-leaning Javier Milei won the Argentina election by a landslide over the establishment candidate. This caused soybean meal to move sharply lower during the opening of the night session, pulling grains down, but a low was put in within minutes of the opening and in the night session and climbed higher. He is the first libertarian to become head of state. He is pushing for radical change to end state intervention and high taxes. Inflation is at 140% in Argentina, and 40% of the population lives below the poverty line.
It’s a holiday today in Argentina, so it’s anticipated when the markets reopen, the peso will be under acute selling pressure with the Argentine Central Bank nearly out of currency. An Argentine Congressional coalition did not foreman Sunday’s election to aid the passage of Melei’s radical policies. His first economic moves have many uncertainties, but Argentine farmers are expecting the cancellation of export taxes and will not be selling crops anytime soon. The Argentine ag markets will be frozen awaiting the presidential installment, which will occur on December 10.
Chinese customs data showed total October soybean imports were 5.16 MMT with 4.81 MMT from Brazil, up +71% from September. From Jan-Oct, China’s total soy imports are up +21% compared to the same period in 2022. Chinese state media said that according to the Ag Ministry, the county’s sow herd is still too large (42.1 million head). They will take steps to promote “reasonable” capacity.
The forecast for Brazil will have needed rains falling this week, but totals are far less than normal, with additional warm, dry weather forecasted to carry into December. Rain is starting to fall across portions of northern Brazil, with totals of .25-1.5” helping Matto Grasso do Sul, Parana, and Soa Paulo. Total coverage of the rain, though, is low. For now, the extreme heat and dryness are reduced for this week in Northern Brazil, while frequent bouts of rain will continue across Southern Brazil. The same stuck pattern of recent weeks looks to persist, but Northern Brazil will be capturing some rain totals this week but far less than what was discussed in the euro forecast late last week. The GFS ensemble offers rainfall totals for the next 10 days to average out to 1-2.00”. This is a quarter of normal for this time of year for the month of November, while southern Brazil receives another 3-6.00”.
Live and feeder cattle futures did close higher for the week in last week’s action, with a firm outlook offered for early trade. November cattle on feed report lacked any bearish surprises, so further recovery on the board is anticipated. The Cattle on Feed results from Friday: On Feed 101.7% (101.8% expected), Placements 103.8% (104.9% expected), Marketings 97.5% (97.9% expected).
Negotiated fed cattle last week was lower in all regions, with live sales mostly at $178, down $3 in the north and $2 lower in the South. Dressed sales in the north were $4 lower for the week at $282. The cattle prices are still $24-28 higher than a year ago, but it’s been the largest four-week correction in the cash market since July 2020. Funds have liquidated another 15,000 contracts of length in the futures last week. If February live cattle can hold the early month low, then we could be working out through a corrective low with a rally anticipated in December when seasonal strength reasserts itself with upcoming demand for the Christmas holiday season.