November WASDE crop report out at 11:00 a.m. today

Today’s November USDA crop report is out at 11:00 a.m., and traders are anticipating some minor cuts to production, especially in soybeans, with small cuts to ending stocks expected for corn and soybeans. There has been a debate over the impact incredibly dry conditions at harvest may have on yields and whether we will see adjustments lower as a result. According to officials, this month’s data will reflect more actual field results, as well as asking farmers to report the yields they
received and adjusting production to reality from their expectations seen in previous surveys. Anecdotally, later harvested yields were disappointing in many parts of the country, with farmers wondering just how much harvesting beans at 10% moisture or below and corn at 13% moisture or below impacted their overall production.

The debate over what President Trump’s trade policies will mean for agriculture is just beginning. During the election, there were several threats of blanket tariffs impacting some of our best trade partners, but early in the transition, the conversation regarding trade seems to be already taking a gentler tone. According to insiders, the administration plans to offer the rollback of some of the Biden administration’s tariffs if they choose to deepen trade ties with the US.

The use of direct sanctions and tariffs is also being discussed, with certain entities singled out for their wrongdoing by the administration as opposed to a blanket approach. Considering the Biden administration has added tariffs on over $18 billion worth of Chinese goods and limited chip and technology trade and access to certain markets, Chinese officials are likely willing to negotiate.

Malaysian Palm oil surged overnight to new record highs for the third consecutive session, and they are at multi-year highs. Spot Palm oil rallied 112 ringgits to $0.53/pound. Spot cash rapeseed oil in Europe is quoted this morning at $0.55. Upside risk is present in US soy oil, and it's important that export demand is funneled to the US vegetable oil market just as foreign markets rise.

Fed chair Jerome Powell confirmed trader expectations, with the group choosing to cut interest rates by 25 basis points in this month’s meeting in a unanimous decision. The post-decision presser indicated that Powell and his cohorts feel they are making the right moves that will allow them to balance inflationary pressure and the job market, with one more small cut likely next month before they reassess the pace at which additional cuts need to come. During his afternoon press conference, Powell reiterated his and the Fed’s independence, saying he would not leave his position even if pressured to do so by Trump.

World wheat markets have struggled as global tenders have uncovered cheap Eastern European supplies and as Russia’s spot market sags to $228/MT versus quotes of $240+ in early October. US drought in the HRW wheat belt is slowly eroding with recent rains. The Russian wheat crop, though, is not healthy in many areas and, in fact, is below average due to dryness, and the total wheat seeded area in Russia is forecasted to be down 1.5 mill acres from last year. Close attention will be paid to French winter wheat seeding progress, and certainly favorable N Hemisphere weather is needed in April-June to expand exporter wheat production.

Live and feeder cattle futures close higher on Thursday, with a lower outlook offered for early trade this morning. Yesterday afternoon boxed beef values plummeted, with Choice down $6.13 and Select losing $3.48. The negotiated Fed cattle trade remained low on Thursday, putting the bulk of the business into today. Yesterday, early sales in Nebraska reported a $294 on a dressed basis, which was $2.3 lower for the week. Meanwhile, live trade in Iowa was off $2 at $188, with the weaker trend expected today given the break-in boxed beef values.

Steer carcass weights set a record high of 960 pounds in mid-October, and the Actual Slaughter report this week showed an average weight of 957 pounds for the week ending October 26. Heifer weights were unchanged for the week but at a record high of 866 pounds. Weights typically peak in late November/early December and then fall into spring as winter weather works against feed conversion rates.