The World veg oils continue to lift soybean oil/soybean values

This morning, there was more of the same from yesterday, with soybeans following the veg oil/soybean oil market strength higher while wheat drifted. Wheat prices are contending again with sagging spot Russian cash markets. The Russian cash market is quoted between $230-235/MT, which is down from last week’s $237. This goes against the ideas of any Russian for price in the short run. The Algerian tender is important and awaited, but while Russia may lose its forward market share, it’s clear exporters continue to work to dominate trade and clear existing inventories today. Russian stocks are down following yield losses in 2024, and Russia’s December-June surplus will be down 10-11 MMTs year-over-year. But until Russian inventories are drawn down, US, European and Canadian markets will have to wait to add premium.

When looking at wheat, it is interesting to note that Ukraine is discussing introducing a minimum price for their exports going forward, as we have seen in Russia. The Russian minimum price quoting has had mixed results at best, though, as the minimum value seems incredibly situational. There have been rumors circulating, though, that Russia may move to restrict exports after the first of the year to battle inflation; if realized, this could significantly impact trade flows to any world end user under covered.

Strength in world vegetable oil prices is also helping support US and Chinese crush margins and margins worldwide. Increased biofuel demand coupled with reduced supply availability of canola and sunseeds in the EU and the Black Sea, with similar developments in palm oil from the world’s largest palm oil producers, has created an incredibly tight vegetable oil market outside of North America. Some of this strength is expected to carry over to the US market eventually, with many countries around the world likely needing to increase their soyoil imports in the months ahead and the US being the best market with the greatest supply availability.

Brazilian FOB corn premiums have scored new seasonal highs. This week, Brazil’s interior corn price index has rallied to a new 7-month high at $5.35/Bu. It’s difficult to be bearish of South American corn prices as stocks tighten into the December-Feb. This allows the US market to find some export demand on breaks into the winter. Unlike soybeans, the South American corn pipeline will not be fully replenished until the summer of 2025. China's stimulus could be working, and it could be a positive development for commodities post-election. China’s factory output jumped unexpectedly last month, showing one of its best month-over-month increases in years. There is building talk that after the elections, China will start to do some Fed-style bazooka stimulus activities, which could lead to larger imports from China into the new year.

Live and feeder cattle futures closed lower on Wednesday after a sharply lower run earlier in the day. After Tuesday's outside day down reversal, cattle futures fell under pressure from the technical selling, with index funds having purchased so many contracts over the past five weeks. Cash sales on Wednesday were generally steady with last week, hedged feedyards took advantage of weakness at the CME to sell steady cash bids and pick up a couple of dollars on a basis. Live trade throughout the South was quoted at $190, while dressed sales in the north were $298-300.

Cattle slaughter at midweek totaled 306 9000 head, up 2000 from last week. October live cattle went off the board today at the end of the session, with major moving average support and December cattle in the 183-184 range. However, they were 5000 head less than a year ago. Box beef values continued to slide, with choice off $1.17 and select beef giving up $0.64.