Grains trade mixed overnight.

Grain futures are mixed this morning with overnight strength in soybeans found from the large soybean-producing group in Brazil called Aprosoja, putting out crop ejections. It estimated that Mato Grosso's soybean output is down 20% from last year. If realized, this means Matto Grosso will be down seven MMTs, which is 260 million bushels, pulling soybean production close to 250 MMTs versus the USDA’s current 161. Neighboring Mato Grosso do Sul, Goias, and Tocantins also face downgrades. The weather has been dire, with constant temperatures in the alternating 95-110° days over the past month. Temps in northern Brazil this time of year are normally in the 86-90° range with monsoonal rains. Immediate rains over the next several days are needed.

Brazil is boosting its mandated biodiesel blend volumes beginning March 2024, which increases soy demand, while Argentina has hiked tariffs on oil and meal exports from 31 to 33%. Brazil’s ABIOVE is projecting 2024 biodiesel demand to rise to 8.9 billion liters from 7.3 billion liters in 2023. More soybeans will be used domestically in the US and Brazil, while Argentina is developing an incentive to export raw beans from spring forward. Rising biodiesel production in the US and Brazil is supportive of beans and oil, but there will be a glut in meal supplies by next summer.

Spot crude oil is up almost $1.00 a barrel this morning, trading near $75.00. Palm oil rallied for 1/5 day while spot corn in Brazil is up another 9 cents/Bu at $6.22. Market participation is lacking during the holiday season, with markets unable to jumpstart any trend unless there is a shock to the marketplace. Regarding trade moving through the Red Sea, the US has announced a task force aimed at protecting shipments from attacks from Iran-backed Yemeni militants.

South American weather had light showers producing .20-.30” in central Mato Grosso do Sul and far eastern Mato Grosso, but otherwise, dryness dominated across large areas of Mato Grosso do Sul and Mato Grosso. Moisture starts expanding northward over the next 24 hours, with organized showers projected into northern Brazil Thursday-Friday. The GFS keeps five-day accumulation in Mato Grosso capped at .50-1.50”. The EU futures much greater amounts of 1-3” but has been consistently wrong for almost 3 months now. Both do agree that rainfall eases in the 6-10 day period after the current rain event, with above normal temperatures resuming and N Brazil by next Wednesday. Rain this week is crucial to fall and the markets have priced the event.

Live and feeder cattle futures went into correction mode yesterday after peaking early Monday and trying to consolidate on Tuesday. Cash markets in the Plains and the Western corn belt continue to remain quiet on limited demand. Next week’s kill will be holiday reduced, with cash expectations to be steady this week.

This Friday is the monthly Cattle on Feed Report with average trade estimates for November looking for marketings at 93% of last year, placements at 96%, and December 1 feedlot inventory of 102%. Large placements and net inflows in September and October will have reduced placings last month and this month. The net inflows of those two months amounted to 212% of last year, the largest since 2014, putting feedlot inventories above last year in both months. So now, following two months of larger placements, the November placement rate looks to fall back below last year. Live cattle futures look to consolidate the rest this week, looking towards cash leadership and the Cattle on Feed and Quarterly Hogs and Pigs Report results out at 2:00 p.m. Friday.