Lack of Turn-around Tuesday sees higher night trade.
Soybeans and corn continued higher overnight, building off of Monday’s strong reversal and close. Heavy rains continue in southern Brazil, weekend rains in the north/central areas are less than forecasted, and rains look scattered this week. Next week looks hot/dry. Macro optimism is giving the CBOT a boost, with the Dollar dropping, the Fed leaning dovish, and stock markets having the strongest month this year. The Yuan and Real are both higher, and crude is recovering.
Argentina will soon be reopening its financial markets in the wake of Sunday’s elections of Pres. Melie. Argentine banks add liquidity and worry that customers will want to change their pesos for US dollars at almost any conversion rate. Virtually no cash grain is expected to trade as Argentine farmers hope for a reduction of export taxes and stronger future bids. The Argentine ag markets look to stay frozen until there is clarity on Melei’s initial policy steps surrounding agriculture exports, which may be more than a month from now.
The large index fund short in wheat and corn could soon be at risk with the US dollar, which has been continually weakening since peaking in October. World wheat stocks have declined in the last five years, and US ending stocks are the 2nd lowest in 10 years. Russia is expected to be depleted of exportable wheat in early 2024.
The soy complex is seeing stronger fundamentals growing as the huge cash crush margins and building demand for soy oil through renewable diesel have improved domestic demand. Meanwhile, Chinese imports look to improve even further with the delay, if not reduced Brazilian crop until late February. According to its National Energy Administration, China is pushing pilot projects to produce domestic biodiesel. China is rapidly trying to catch up with Western nations in the conversion of veg oils/used cooking oil into biodiesel.
In northern Brazil, the rain had dotted areas over the past 24 hours, with totals ranging from .2-1.50”, with estimated rain coverage no better than 40-45% of northern Brazil. High temperatures range from the 80s to upper 90s. The extreme heat of the past 10 days is fading across Northern Brazil as the high-pressure Ridge de-amplifies. The euro model again is proving to have been too wet for N and C Brazil and is now turning drier like the GFS. It appears daily afternoon thunderstorms will persist for the next 4-5 days across N and C Brazil, but the 10-day accumulations will be in a range of 1-1.75”, well below the deluge of rain the euro was anticipating of nearly 4 inches plus (note the Euro being wrong again now for eight weeks). The total rainfall will have Northern Brazil 40-60% below normal for November. The far NE corner of Brazil will see limited rain, while the southern one-third of Brazil endures again above normal rain and localized flooding across RGDS, Santa Catarina, and S Parana, where soils are heavily saturated.
Cattle futures were mixed yesterday in a very wide expanding range of sharply higher in the morning and lower during the session, with recoveries during the day and a mixed close. Any cash cattle trade this week will likely be wrapped up in this week’s business before Thursday’s Thanksgiving Day holiday. Box beef values started out higher on the week, with choice picking up $188 while select rose $0.25. The choice-select spread advanced to a $24.80 choice premium. The spread has been above last year and at record seasonal levels for the last two weeks, while the choice grading percent has been below a year ago since September. Seasonally, the choice grading percentage trends increase in the first quarter.