A firm start across the board this morning with wheat leading.
Wheat has been up six days straight as of yesterday and is again higher this morning, the longest daily up streak since Russia invaded Ukraine. China has bought US soft red winter wheat two days in a row and has already surpassed last year’s marketing year purchases. As of today, we have sold 92% of all the SRW wheat USDA has planned for the year, with six months to go to the end of the marketing year. The USDA may have to adjust wheat carryout numbers in this Friday’s WASDE report and not wait, and it has become obvious we will overshoot the mark. There were rumors yesterday of more widespread US corn and wheat purchases by the Chinese, with possibly 8-10 cargoes of Brazilian switched to the US PNW.
Brazilian corn prices have been moving to the upside amid China’s massive purchases, which have been estimated since May to be at over 19 MMTs. The Chinese have bought out the Brazilian corn market with cash-based bids now soaring to $1.50 over Chicago's March futures. The Brazilian corn market will now be enduring a nearby shortage until spring, sustaining $6.00/Bu cash prices into February. Meanwhile, $5.00-5.10 March corn will bring about new corn sales from farmers in the new tax year.
The President-elect of Milei of Argentina will be sworn in on Sunday, and it’s widely expected that he will get rid of government export volume restrictions. In order for him to do the important work of reducing export taxes, it will require congressional approval and will take time. For this reason, Argentine farmers have halted cash sales in the hope that export taxes on ag products will be limited.
Some showers have fallen across N Brazil on Tuesday, but rainfall amounts range from traces to .5” across Mato Grosso and Goias with coverage no better than 25%. Forecast models are now coming to better agreement, which raises confidence in the seven-day rainfall projection. The extended-range solutions still remain too wet and in error as seasonal flows have not developed. When you view the 10-day rainfall GFS models, Northern Brazilian rainfall stays in a below-normal trend. For the rest of this week, drier weather will occur in N Brazil, with showers returning over the weekend. The 11-15 day models continue to carry rain that remains backloaded, and as forecasts move inside the 10-day, they start to diminish.
Live and feeder cattle futures managed a higher close on Tuesday but remained below Monday’s high. This creates an inside trading day, with today’s action being the decisive day of whether a low was made on Monday or will be rechallenged. Meanwhile, negotiated fed cattle markets are still quiet, while some light sales on Monday were at $171 in Kansas, which was $3 lower than last week. Small volume trades at similar praises occurred on Tuesday with limited dressed sales in the north at $271, which was $4 lower. Sale volumes are small, with most of the week's business still yet to develop. Box beef was lower, with choice slipping $1.24 while select dropped $3.70. The choice/select spread has now widened back out to a $34.62 choice premium, a new high for the year and a record for early December. Tomorrow’s December 7, and we should start to see a more positive tone to the cattle board as seasonals turn dramatically higher into the end of the year.