Reduced rain in Brazil ignites new soybean interest.
This morning, row crops are higher, led by soybeans, while wheat corrects its recent spectacular eight trading day rise. The 10-day Brazilian forecast is seeing rain totals reduced. The December WASDE crop report is out by 11:00 a.m. this morning which will have US supply/demand tables updated with no production guesses for this year’s crop until January. Yield guesses are tied to South American corn and soybean crops. It’s anticipated that the USDA should be trimming wheat ending stocks that SRW supplies already meeting their export mark six months early in the season.
Soybeans have bounced $0.30 off of Wednesday’s closing low as major forecasting models struggle with Brazilian rainfall in the 11-15 day window. As the longer-term models come into the 10-day window, they continue to find reduced expectations. Showers are anticipated this weekend in Western Mato Grosso and into early next week as regional moisture improvement is probable. Drying continues in E Matto Grosso along with Goias and Bahia, which is 40% of the Brazilian soybean area. Brazil’s December 12-18 weather models have trended drier.
The strong wheat recovery paused at a high on Wednesday but continues to maintain strength not far from those highs. Wheat corrections are now seen as buying opportunities as Chinese demand has altered the US balance sheet for SRW wheat. India’s government decided to lower the wheat stockpiles millers and traders can hold in a move to increase wheat availability and moderate prices. India is also mulling the release of 2.5 MMT of wheat from state reserves into the marketplace. Their state held inventories are at the lowest level in 7 years at 19 MMT.
Live and feeder cattle futures continued their selling yesterday with live cattle making slight new lows in the front months and feeder cattle challenging recent lows with deferred 2024 contracts making new lows. January feeders currently carry a historic $12 discount within 50 days of cash settling. Negotiated fed cattle markets on Thursday were quiet following active trade earlier in the week is seen sharply lower prices to $171, off $3-4 from the prior week. Wholesale beef values had choice down $0.72 while select gave up a $1.07.
Yesterday, beef exports for October were reported down 20% from a year ago. The trade data was the last data point needed to calculate domestic demand, which was down less than 1% from last year. Domestic beef demand has been unchanged to higher the last six months, and this is even as prices had reached historic highs. Index fund liquidation of their position should be getting close, and this afternoon’s COT report will be as of Tuesday’s closing trade to make assessments.