Questions concern Harvest is winding down across the United States, and a question we are starting to hear more and more is “where is the grain?” Farmers across the Corn Belt have indicated they are not holding any more on-farm inventory than normal right now. This follows a quarterly stocks report from September that indicated large volumes of grain were held in farm bins. Commercial terminals are reporting mixed inventories, with some needing to build ground piles to take deliveries, while others claim they are not filling to capacity. Regardless of where the inventory is, buyers are showing more urgency in extending coverage and pushing basis to do so.

Basis values across the interior market have now mostly returned to their pre-harvest levels. Basis values were pressured to start harvest, which is not unusual, but rebounded quite quickly. We did hear some reports of elevators piling grain outside this fall, but also several reports of terminals not filling. This is further bringing into question the size of this year’s crops and forcing buyers to push for coverage. This is most concerning for the ethanol industry right now as profit margins are already minimal and these basis pushes are generating negative returns.

An interesting development is starting to take place ahead of the U.S. holiday season that is getting noticed in the cattle market. Typically, we see a decline in red meat demand at the holidays as more poultry is consumed, mainly turkey. It appears consumers are tiring of the traditional holiday meals and are opting to serve beef instead. Normally the U.S. beef supply builds over the winter months, but this added consumption may limit additions to an already low U.S. beef supply.

While the lower U.S. cattle inventory and tight beef supplies have benefited cattle values, it has cost the U.S. export business. Much of this loss in demand has shifted to Brazil, where year to date beef exports now total 2.3 million tons. This is a 34 percent increase from last year. Sales to China have increased the most, growing 9 percent from the year before. China is now 61 percent of Brazil’s beef export demand.

This increase in beef imports has affected China’s domestic production though, and farmers are now struggling. Beef values in China have dropped 18 percent from last year on these elevated imports at the same time consumer demand has stagnated. Consumers in China are buying more beef than in recent years, but not the volume that China has supplies for.

The National Oilseed Processor Association soybean crush for October was an all-time record high 199.96 million bu. This was well above the previous high of 196.4 mbu set just last March. This soybean crush was a 12.8 percent increase from September’s 177.32 mbu and 5.4 percent more than the 189.77 mbu from October 2023. What is most impressive with this total is that it would have been even higher if not for the large soybean crusher in Des Moines, Iowa, being closed for major repairs. Soy oil stocks at the end of October totaled 1.07 billion pounds, the tightest inventory in 10 years.

What was even more supportive for the soy complex, however, was news that China would be suspending its used cooking oil export tax refund. Exporters in China have been receiving a 13 percent tax refund for exporting this product, with much coming to the U.S. for renewable fuel production. The immediate reaction in the market is that this will greatly benefit U.S. soy oil demand, which is already at all-time highs, and further reduce reserves that are reaching minimal levels.

The Chinese economy has been more of a factor in commodity trade recently. China’s economy grew by 4.6 percent last month, the slowest rate since early 2023. This is mainly from the poor performing real estate market in the country. This comes as China’s government has announced a $112.38 billion stimulus plan for the country’s stock market. These funds will be available for traders and brokers to buy stocks and also allow for low interest loans for borrowers. China has been suffering from deflation for several months, and previous plans such as this have had little benefit.

Over the next few weeks, we will start to see a change in market focus. Nearly all interest in the markets from now until the end of December will be focused on getting final positions in place for yearend. This can reduce the amount of influence that daily fundamentals have on price discovery.

We will also start to see more volatility in the cash market over the next few weeks. This comes from farmers shoring up their financials ahead of year end for tax purposes. Historically this has generated more soybean movement as more revenue can be generated with less inventory, if needed. With more operations moving to a fiscal year for taxes this seasonal pattern has had less impact on market movement. Even so, basis values do tend to become more turbulent at this time of the year as country movement becomes choppy during the holiday season.

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