Grain trade finds buying interest overnight.

Grain futures are higher to start the session this morning, as soybean and corn crop estimates for Brazil were cut slightly early this morning. Brazil’s CONAB released their December 1 data showing 23/24 soybean production estimated at 160.177 MMT vs 162.42 MMT prior and acres at 45.309 million vs 49.25 million prior. The 23/24 total corn production was estimated at 118.528 MMT vs 119.066 MMT prior, and acres 21.05 million vs 21.135 million prior.

This morning, Chinese customs data pegged November soybean imports at 7.90 MMT, up +53.5% over October. December exports are expected to come in above 10 MMTs as vessels clear and show an active import pace. It also showed November vegoil imports off -2.2% from October at 924,000 MT.

Egypt continues to seek world wheat, and it has received the lowest offers from Russia with 180-day credit terms at $260/MT. French and Romanian wheat offers came in higher, so the bulk of any purchase will likely be sourced from Russia. The sales are higher than prior purchases, revealing that world wheat price rallies are occurring. If Russia does not run into logistic troubles, the wheat will be shipped in mid to late January.

Rains have fallen now the first part of this week across Northern Brazil, but amounts are still well below normal with above normal temperatures. More rain is needed as the soil does not hold moisture and does not have the profile of Midwest or Northern Plains soils. Forecast models are now a little dryer in their forecasting for next week, but they still showed .7-1.75”. This rain is 50% below normal and will witness less than 1.00” which is 50% of the coverage area. The 11-15 day models continue to try to produce rain again because of the monsoonal effect, but as we get closer to December 20, when two-thirds of the month is up, rainfall of at least 4.00 of total rainfall needs to have occurred or production cuts will start to mount.

Live and feeder cattle again resumed their tumble, with live cattle pushing new lows while feeder cattle rechallenged early week lows. The cash feeder Index, in the meantime, rose $0.45 to $224.23, with all feeder cattle futures contracts through May well below the index. Negotiated cash trade for Wednesday was $3 lower for the week in all regions at $171. Meanwhile, the dressed sales in the north were also at $271, which is $4 lower on the week. Even though livestock slaughter is lighter, the choice beef cutout value dropped $3.19 on the choice to $290.56.

Open interest in live cattle has collapsed, making a thin, dangerous trade while the markets remain without strong bids under the market and a lack of strong hands to step in and absorb the margin selling and liquidation. Today’s December 7, and statistically over the last 30 years, a strong seasonal implies that the next several weeks will experience a positive outlook (similar to the sale of grains after the July 4 effect). This doesn’t mean there can’t be down days but suggests that there will be more up days than down days.