Wheat and soybeans lead morning strength.
Soybeans and wheat are higher this morning on follow-through buying from yesterday’s strength, while corn struggles with old longs being liquidated ahead of first notice day Thursday. Soybeans are finding support on the longer-term forecast that does show the rain coming December 4-five for N Brazil, but now it’s anticipated accumulations will not be widespread, even though the indications of rain are 1.00-2.25” where it does rain.
India has announced it will fund a massive domestic food program for over 100 Mil people over the next five years at a cost of $14 $2 billion. The direct food program will shield India’s impoverished from rising food prices. The new Indian food program started during the pandemic and has become popular.
The US dollar continues to tumble, and yesterday’s news from one of the district Fed chairs implied that interest rates being higher longer is not as long as they think. This spurred gold sharply higher to challenge values seen in May, when the US dollar was considerably softer than present, and will start to pique the interest of fund managers to start eliminating their short positions in grains with the concern that South American weather will not be ideal.
It was dry across N Brazil on Tuesday, with temperatures in the 80s to upper 90s. Southern Brazil continues to receive its onslaught of rainfall with rain totals of .25-1.75”, with some localities even getting heavier amounts. Forecast models remain consistent with near to below-normal rains across the northern half of Brazil, with the GFS/Canadian models remaining drier than the EU models over the next 10 days. Rain should start to fall on Sunday and early next week, but accumulations look to be 30-40% below the 10-year average. High temperatures then will range in the 90s to lower 100s, with net soil moisture losses persisting across N Brazil into December during the flowering and looming stage.
An explosive rally occurred yesterday in live and feeder cattle prices, likely creating technical indication that a low is in, with January feeders besting Friday’s close and Monday’s high by settlement. The CME cash feeder Index was $3.42 lower on Tuesday but is at $226.96 and above the January-March futures. Negotiated fed cattle are at a standstill while Monday’s light trade was down $2 for the week at $175, and those sold were $6 over the Monday close.
Fed cattle have closed several chart gaps left from last spring and now have several overhead gaps above to plug. The narrowing of the December/February spread looks to keep the December marketing rate elevated, which could wear on the cash market nearby but will reduce supplies in early 2024. It’s likely that important lows occurred in the live cattle trade on Monday.