A soft trade meets the morning session.
The grain trade is starting out softer this morning, with wheat having corrected partially fronts strong recovery pricing yesterday. Yesterday afternoon NASS engaged in its housecleaning of the past five years on its data and made modest adjustments despite a slew of US and state estimates. Even though the stock adjustments were mostly cosmetic, ending stocks for 2022/23 were lowered by ` Mil Bu for corn, 4 Mil Bu for soybeans, while wheat rose 15 Mil Bu. In this upcoming Friday's report, with the recent November soybean exports number being 30 Mil Bu larger than FGIS , a potential drop in US soybean yield or production on Friday could be seen as bullish with the 23/24 ending stocks already tight compared historically. Keep in mind markets are closed on Monday for MLK, so a three-day weekend will cause fund managers to possibly buy short positions back even if the report is slightly negative in a “buy the rumor, sell the fact” mentality with such a large position.
The January USDA Report on Friday has the average trade guess for yields as 174.9 bpa for corn and 49.9 bpa for beans, in line with November. Quarterly stock estimates include corn at 12.050 bbu (highest since 2018), soybeans at 2.975 bbu (smallest since 2020), and wheat at 1.387 bbu (largest since 2020).
Brazil’s CONAB lowered their estimate of the country's 23/24 soybean production to 155.269 MMT from 160.177 MMT. They also lowered their estimate of the country’s 23/24 total corn production to 117.603 MMT from 118.528 MMT. DERAL reported Parana, Brazil soybean conditions declined to 71% G/E compared to 86% G/E last week.
Freight brokers estimate Ukraine’s Ag exports through the “alternative” Black Sea corridor reached 4.8 MMT in December, more than any month under the UN-backed deal. Romania’s Black Sea port, Constanta, shipped record grain exports of 36 MMT in 2023. This is up 50% over 2022, with Ukraine making up 40% of the volume.
Forecast models in South America maintain another week of daily monsoonal rain potential across N Brazil with accumulations of 1.50-4.00”. The best rain falls on the weekend with diminished totals in the 9-15 day window. Additional showers are anticipated to fall across Argentina with localized areas enduring rain greater than 4.00”.
Live and feeder cattle futures yesterday enjoyed another quick rebounding rally that was again met with selling on retracement levels and closed well off session highs. Cash markets were quiet, and trade is likely to wait now to the end of the week. Feedlots are looking to sell show lists higher to offset the weather stress so the cash outlook is looking to be steady/firm.
Winter storms have slowed deliveries on Tuesday and cattle slaughter was estimated at 94,000 head versus hundred 26,000 head last week and hundred 28,000 head last year. The Packers are looking to cut “B” shifts, which caused the weakness in the trade yesterday. Choice values yesterday gained $1.33, and select jumped $3.47. The CME trade looks to want to take on a softened trade attitude on its unwillingness to rally in the storm and cold weather. Seasonally, feeder and live cattle soften after the first week of the year into the opening of February.