The market is softening from an early-month high pricing push.

Grain futures are soft this morning after advancing into the opening part of the month. The current up run appears to have created a high watermark, prompting a corrective price action. China purchased 120,000 MTs of wheat (one cargo of white wheat and one of spring wheat for December delivery), and since the wheat prices have advanced considerably, the market asks who’s next?

Into the weekend, we are likely to see positioning for next week’s WASDE crop report on Friday, November 14, along with the Goldman Sachs report that starts on Friday. The government shutdown has now reached a record 36 days, and none are scheduled to end, but of course, the rumor is that an agreement is close. Meanwhile, the trade is anxiously awaiting more Chinese sales announcements, but the problem is that the government is closed; they could be happening without us even knowing. The basis values do indicate business has taken place in both the PNW and the Gulf.

In South America, the planting pace in Brazil and Argentina is progressing normally. Soil moisture levels are anticipated to be adequate, but there are pockets in Brazil that do need rain. This is primarily a safrinha production area. While not a major concern yet, the forecast of La Niña strengthening has the marketplace closely monitoring developments in Brazil and Argentina.

Yesterday’s ethanol weekly production number was a record high, helping corn prices attempt to reach last week’s high, but so far this morning, it is not finding favor. The market is always concerned that we still have no renewable fuel policy.

The current advance in grain futures, which reached highs yesterday, is set for corrective trade into next week. The November 14 WASDE crop report will reveal a lot, and if the USDA keeps its downward trend from September and likely lower yield guesses that were in place in October, a recovery high could occur into mid-month.

Live and feeder cattle futures tumbled yesterday to limit losses across the board, so we have expanded limits of $10.75 for live cattle and $13.75 for feeder cattle. The futures market seemed to melt initially after the opening as comments from Pres. Lulu of Brazil stated he was unsatisfied with the slow pace of lowering the Brazilian tariffs imposed on July 1. He commented that he has Pres. Trump’s phone number is going to need to give him a call. Whether this occurs or not, the marketplace has index funds that have decided they no longer want to be long this market, and without the Commitment of Traders report, we cannot ascertain how much is still left to liquidate. Rallies to them are to be sold, and they are ignoring the strong cash market, which is softening, but nothing near the extent the board is reflecting.

Yesterday we saw some live trade in the north at $230, which was steady on the week, while dressed sales were also steady at $258. In the South, the trade was quoted $4 lower at $232. Measured move theory for the current wave collapse dictates that eventually, December cattle will trade near 208-210, with January feeder cattle targeting 295-305. As stated earlier, the index funds are liquidating, and they have no care to tight stocking numbers going into the winter and where the cash trade will ultimately end up this winter. For now, they just want out.