Wheat trades higher and beans overcome sharp deficit.

This morning’s grain markets have wheat pushing higher for the fourth session row, putting pressure on the massive short position that has seen wheat rally $0.60 in 4 ½ sessions straight. Meanwhile, corn is soft, while soybeans are overcoming a $0.14 deficit and are now only a few pennies lower. Near-term rains are coming up less than expected. Still, long-term forecasts consistently maintain rain to come because they are stuck on reading the monsoonal period for the forecast when rains are just frontal passes, not monsoonal in nature.

Corn and wheat, going into the end of the year, are caught with funds the shortest they have been in three years. The Commitment of Traders Report on Friday showed managed funds sold 20,976 contracts of corn (net -206,478), sold 14,025 contracts of beans (net 67,562), and sold 11,810 contracts of wheat (net -119,986). Index fund traders are only paid on closed profits, and with the end of the year coming, they also have to deal with mark-to-the-market taxation on the whole trade. This is a coming problem with the massive short trade over the next 27 days.

The USDA Oilseed Crush Report showed a soybean crush record in October of 201.4 mbu (in line with expectations) vs 174.8 mbu in September, and soy oil stocks were modestly lower than expected at 1.507 billion lbs. USDA Monthly Grain Crushing Report data showed that corn used for ethanol for October was 461.5 mbu, up from 430.2 mbu in September and up from last year’s 448.6 mbu. This still trails October of 2021 by -1.4%.

Demand is expanding domestically, and exports are picking up. Upcoming Brazilian weather keeps support in soybeans in the 1297-1320 pocket, while March corn has support at 475-480.

The rain did develop overnight in central northern Brazil, with mostly .25-.50 totals, while Western Mato Grosso sees rains of 1.25” covered so far as only 60-65%. The forecast has rains just another day in and Brazil and then drier weather for the remainder of the week. Showers return on the weekend. The forecast continues to bring rain in the longer-term models while near-term solutions come up short. That is because the models want to read a seasonal monsoonal rain period, which would be normal, but not occurring as rains have been just frontal passes. The 10-day rainfall total from the more accurate GFS shows just another .5-1.50” of rainfall, which by the time you get to December 15 reflects 40-60% of normal with temperatures returning to the 90s and lower 100s.

Over the weekend, it was 102 in many locations of Mato Grosso, while Mato Grosso Do Sul went into the mid-100-110s. Only the Western third of Mato Grosso received decent rains this weekend, while the eastern two-thirds and well into eastern Brazil had less than .40 inches or less of rainfall. Mato Grosso accounts for 26% of the Brazilian soybean production but is 30% of exports, making it the barometer production problem.

Live and feeder cattle prices closed sharply lower on Friday and continued the lower low, lower higher, and lower close mentality on the week as index funds bail out of their positions. The index fund's long position peaked in September at over 120,000 contracts, while its current position is now near 30,000 contracts. Index funds typically do not go short cattle but likely want to exit the cattle trade entirely given their actions last week. Last week’s boxed beef was lower, with Choice losing $0.57 and Select down $3.27.

February live cattle have technical support at 168, and if they slip much through that, significant support is at $165 on the weekly charts, which should likely prove solid. Feeder cattle, if they fall through 212, have targets at 210 and then 205.