It's the year's last trading day, with a mixed trade to start
The grain trade is mixed this morning with wheat firm while row crops soften unexpected rains for next week. Over this past year, corn prices have declined 30%, wheat 20%, and soybeans 14%. Today the US dollar is set to post the lowest monthly close of 2023. The US dollar has been on the decline since October, similar to the end of 2022 when the dollar declined into the second quarter of 2023. This could bring about new year investment from commodity funds with the excitement that rate hikes have stopped and could possibly be on the decline in 2024.
The grain trade will close today at the regular time and will not reopen until Tuesday morning at 8:30 a.m. Today, the Brazilian grain exchange is closed for the New Year holiday. Volume is expected to be the latest trading for the week today, and this week has already experienced daily low-volume sessions.
US soybean meal has softened with soybean oil over the past month, removing crushing profitability that was prevalent in October/November. This has made US meal again competitively priced in the global marketplace making the US still the major supplier to the global market until Argentina can enter the trade in late April.
Going into 2024, along with Brazilian weather, geopolitical events can shape price risk with again the recent flooring of actions between Russia and Ukraine over the past week. Overnight, it was reported by Reuters that Russia launched a massive missile attack on Ukraine, killing 12 and wounding dozens more in residential areas of Kyiv and south and west parts of the country. The recent attack on the Danube ports again highlights the alternative Black Sea corridor risk. This week, President Zelenskiy reported that Ukraine’s alternative Black Sea corridor had sent through 12 MMT of cargo to date.
In South America, a pattern change is expected in Brazil. Extreme heat begins to moderate Saturday with a pattern of daily showers starting to expand into northern Brazil with some heavy potential rains Sunday/Monday. Normal/above normal cumulative totals are projected into January 8, with this morning’s guidance keeping the pattern impact of normal rain into January 15. For now, the expectation of improving weather into January is highly anticipated and needed.
Live and feeder cattle prices again tumbled on Thursday, creating a weaker outlook for this morning’s opening. December live cattle were the exception yesterday and closed slightly higher ahead of today’s expiration. The cash trade did develop in all regions Thursday, with packers paying $172-173 in the north, $2-3 higher for the week, and dressed prices were $3 higher at $273. Live sales in the South were $1 higher at $172, marking the market's second consecutive week of higher cash. This hasn’t happened since late October. Comparing cattle prices to a year ago, values are $14-15 higher. Thursday, the choice cutout was down $0.20, and the select was lower by $1.08. The spread is at a historic $32 choice premium.
February live cattle have major support in the 167.50-168.00 range, which was challenged again yesterday and held. 171.00 has been a stumbling block, but once this is overcome, $175-176 would be the next recovery value. March feeder cattle need to overcome 226 to extend their recovery since bottoming on December 7.