Short covering develops in soybeans overnight.

A mixed grain trade this morning with soybeans higher after making another new contract low last night near 955 on the November contract. Short covering is the order of business and soybeans, with the resistance encountered at 977-980 and then more significantly near 10.00. The soybean balance sheet is heavy and even if acres contract in the US by 3-4 Mil in 2025, it’s going to take a South American crop problem to boost soybean futures to back near $11.00. Severe dryness does persist in Argentina and central/northern Brazil, but it’s not until September that the focus shifts to South American forecasts as planting gets underway.

In Argentina, the government ordered two of the nation’s largest oil-seed workers' unions to suspend their weeklong strike and return to work. The groups are still angry over wages not matching the rate of inflation. Operations at ports were said to have normalized by the end of the day yesterday, though farmer selling across the country remains incredibly slow, limiting movement.

Farmer selling has slowed significantly in Brazil, something that, while expected in soybeans with over three-quarters of the crop sold, is somewhat surprising in corn, with harvest just wrapping up. CONAB, Brazil’s USDA counterpart, updated their production outlook this week, keeping the spread between them and the USDA wide. They did slightly increase their export outlook for the year ahead to 36 mmt, something that at face value, seemed bearish. However, compared to the current USDA projection of 50 mmt, 550 million bushels is a major difference and could have major consequences on global trade flow.

The California Air Resources Board has proposed that the state cap the amount of renewable diesel made with seed oils, like soybean or canola oil. It would also require soybeans and other feedstocks to be certified as meeting a sustainability criterion, though it is unclear if supplies of used cooking oil would be subjected to a similar type of certification process when they speak of feedstocks. According to an economist with the American Soybean Association, the cap is said to be at 20%, which would be a significant reduction in the current feedstock ratio, as seed oils contributed to approximately 30% of production in the first quarter of the year. The rules are still in a public comment period for the next two weeks and are open to amendments, but if brought to fruition, they would start to impact producers in 2026, with a full rollout not likely until 2028.

Ukraine’s and Agrarian counsel, a farming group, overnight suggested final corn production may drop to 20-21 MMTs versus the USDA’s 27.5 and compared to 32.5 last year. The USDA projects a yield decline of 15% below trend, while final yield losses of 20-25% relative to the trend are most likely.

EIA’s weekly petroleum report this morning is expected to show ethanol grind up 1-2% over last year as well as a further modest tightening of the crude oil balance sheet. Ethanol production margins have contracted from mid-summer’s peak but remain profitable. The Brazilian cash ethanol market remains above US Gulf quotes, keeping export disappearance growth intact.

Major forecasting models combined maintain rainfall that impacts the Central/Northern plains and pockets of the principal Corn Belt into Friday/Saturday. Then, a drier/warmer pattern follows into the late month. A high-pressure Ridge expands across the Southern Plains this weekend; the Ridge then moves north and east thereafter on August 29. If this is correct, rain in the second half of August will be forced in the Eastern Canada. No tropical storms are forecasted to make US landfall in the next two weeks. The 10-day EU and Black Sea forecast shows no rain for E Europe, Ukraine, and S Russia.

Live and feeder cattle futures returned higher yesterday and are refocusing on Monday’s WASDE numbers on the price outlook. Triple-digit gains were picked up both on live and feeder cattle. Just 205 head traded yesterday out of the 120,000 head killed, and the USDA used the national average price that dropped more than five bucks. It’s a ridiculous transaction being reported almost all cattle that moved yesterday had already previously contracted at unknown prices. Asking prices in the South are $187-188, but it is unsure what asking prices in the North are.

Oklahoma City National Stockyards feeder steers sold $2-6 higher, and lighter weight calves sold $10 higher. Feeder wheat heifer sold steady to $4 higher with heifer calves $7-10 higher. Yet the RTI composite of multiple auctions was lower on the day the Oklahoma strength wasn’t widespread. Yesterday, cutouts had a choice gaining further on select and consistent with the 5-year trend that spread to strengthen during August. Further strength on live and feeder cattle prices technically is anticipated on the charts with targets of 183.00 on October cattle and 242.00-244.00 on October feeders.