Wheat struggles as Black Sea values slip further.

This morning’s grain trade is mixed, with soybean oil firmer as palm oil futures break out of a seven-month trading range to the upside. Meanwhile, spot Russian FOB offers fell below $200/MT, pressuring French milling wheat and US wheat values. With the recent break in wheat values, Algeria is tendering 370-900,000 MMs of optional origin wheat overnight. It’s anticipated that this large wheat purchase in months will reflect the import needs of North Africa after enduring a drought. There are rumors that Egypt will also soon tender. Due to its price, the Algerian tender is expected to be filled by Black Sea wheat.

Malaysian Palm oil pushed to a seven-month high on bullish outlooks from their conference on Wednesday due to expanding biodiesel demand from both Malaysia and Indonesia in production shortfalls due to aging trees and adverse weather. Analysts indicate China may lower palm oil imports and raise soyoil imports due to pricing, with palm oil imports falling by as much as -26% in 2024 to the PRC. Attendees at the Indonesian Palm Oil Association conference were told that it is thought 2024 Indonesian palm oil exports will fall from 30.25 MMT last year to 29.50 MMT this year. They expect production to rise by +2.3% and domestic consumption to increase on higher demand for biodiesel feedstock.

The Buenos Aires Grain Exchange suggested that as El Nino conditions wane, they expect less frequent rains, leading to a drier fall. Crop scout Cordonnier kept his crop estimates steady: Argentina beans 50 MMT and corn 54 MMT, Brazil beans 145 MMT and corn 112 MMT. Another noted crop scout, Patria Agronegoios put the Brazilian soybean crop at 143.18 MMTs, down 7.4% from his previous year's expectations. He also put the winter corn crop expectation at 79.97 MMTs, down 21.9% from the previous year.

Brazilian FOB soybean offers are steady this morning as the harvest accelerates. Paranagua for June is offered five cents under the July futures. Resume crushers and exporters are struggling to secure more than a few weeks of soybean coverage, with domestic cash soy oil gaining due to Brazil’s expanding lending rate in diesel.

Seasonal tendencies have been a struggle lately, but according to Peak Research, the March seasonal tendency for soybeans is to decline 11/12 years for 16 sessions starting today, with corn being down 12/14 years for 17 sessions starting today. But with such heavily loaded shorts from the funds already and the lack of seasonal respect, it’ll be interesting to see.

The next WASDE Report, focusing on USDA adjustments to Brazilian production, is on Friday. The USDA Prospective Plantings and Quarterly Stocks Report is on March 28th. The next FOMC rate decision is March 20th. Bond markets are pricing in three rate cuts in 2024, with the first to occur in July.

Live and feeder cattle Tuesday were steady-soft for most of the session but pressed higher late to score a recovery day from Monday's selloff. Negotiated fed cattle remain at a standstill, with packer bids in the north quoted $1 lower for live at $182 and $2 lower for dressed trade at $288. In the South, asking prices are $186, which would be $1-3 higher.

On Tuesday, the CME cash feeder Index gained $0.84 and is at $247.22, which is $32 over the late December low. Strength in cattle/corn spread action has helped lead the way. Further strength in feeder cattle prices needs to be led by a deferred live cattle futures rally as the corn market is forging seasonal lows. Cattle futures have now been range-bound for three weeks. Support in April cattle is 184.50-185.00. April feeder cattle have support at 252.00. Closes below these ranges would be a trigger for technical troubles for the cattle market that may not reflect market perceptions.