Sunday nights trade broadly mixed.
Sunday night's grain trade witnessed soybeans moving higher on concerning Brazil's lack of rainfall nearby forecast but was choppy due to Javier Milei taking office in Argentina and declaring a “New Era” with new measures to be announced soon, likely on Tuesday no cuts in the grain export tax is forecast at this time, as they have to fund the $44 Bil IMF loan. Wheat futures are softer on the anticipation that China may be done in the near term buying SRW wheat as French and Australian offers are cheaper currently due to the recent run to the upside.
The Commitment of Traders Report on Friday showed that managed money bought 45,945 contracts of corn (net -160,533), sold 30,929 contracts of beans (net 36,633), and bought 23,764 contracts of wheat (net -96,222). The short positions in corn and wheat are still considered sizable, while they have backed off of their long positions in soybeans.
China’s state stats bureau estimates the country’s 2023 corn production at 288.84 MMT, a record volume, despite severe summer storms damaging the crop. The damage was offset by expanded planted acres of 109 Mil, which is up 2.7% from last year.
Northern Brazil’s dryness is expanding despite all the forecasts in the past two weeks of much-improved rainfall. This is bringing new premium interest in the soybean market. Just a few rain showers occurred over N and C Brazil over the weekend with totals of traces to .9” with 15% coverage of any rainfall that was greater than .50.” The 10-day GFS ensemble maintains rain the father out models due to the monsoonal effect of this time of the year, but no organized Monsoon flow has come into place. Scattered showers will impact N Brazil at times this week, but accumulations of .50-1.75 won’t offset the evaporating losses this week as temperatures are in the 90s/lower 100s. The 11-15 day models continue to try to bring in moisture, but they continue to be errors, and confidence falls now that rain forecasts struggle to make it inside the 6-day window.
Live and feeder cattle Friday closed higher, with live cattle lower on the week, while feeder cattle spot January closed slightly higher on the week. Box beef values tumbled $7 on the choice, and select was down over $5. Estimated slaughter margins slipped $8/head. In last week’s WASDE December report, they made minimal changes to the 2023 estimates but did lower the price forecast by $7 to $178. Production estimates were slightly raised for the first three quarters of 2024, and price forecasts were lowered by $4-10. The Q1 forecast was put at $175, which was lower by $10, and this is $8 over the current cash CME equivalent trade. Live cattle price seasonals turn higher this week and into the end of the year.