A lower trade with new contract lows to start the week.

Grains are lower this morning, with both corn and wheat again scoring new contract lows. Profarmer released its final tour results with no surprises. They came in at 181.8 BPA on corn and 54.9 BPA on beans vs. the USDA at 183.1 bpa on corn and 53.2 BPA on beans. While lower than USDA on corn they only sampled the middle of the Corn Belt, and the fringe will have something to say before the final in January. The bottom line is that we’ve probably seen the largest numbers the USDA will print for the year, and the crop seems unlikely to get “bigger” from here. Several satellite services have the crop much closer to 180 bpa nationally, which appears more realistic given the planting season. September 12th USDA report will be the driver as we head into the fall discovery period on crop insurance, either way.

With this Friday being first notice day and so many HTA contracts to roll or deliver, corn will likely stay under pressure until Friday. This will set up another opportunity for a first-of-the-month low, which will occur over the Labor Day weekend. Currently, for the first notice day, there are 424 contracts of Chicago wheat, 15 contracts of corn, and 10 contracts of soybeans registered for delivery. In the products, there is no soymeal, but 415 soil contracts are registered. The wheat and soy oil receipts have been on the decline since the July delivery period.

The Independent Labor Board in Canada ordered rail workers back to their jobs on Saturday to prevent a worsening backlog. The Teamsters union suggested they would appeal to the federal court, but it’s unlikely the court would maintain a strike. Canadian railways are expected to take a few weeks to get back to normal, but a lengthy shutdown has been avoided.

Russian 12.5% fob wheat is offered this morning at $217/MT, which is steady compared to late last week. Meanwhile, December French milling wheat futures are off €2.50 at 206.

The president of Indonesia indicated on the weekend that he would push for a 50% blend rate of palm oil into diesel early next year to save $20 bill from sending it overseas. Last week, Indonesia indicated that it would raise the diesel blend rate to 40% from the current rate of 35%. A 50% blend rate would push Indonesia to use 18 MMTs of palm oil and produce green diesel from the current rate of 11 MMTs. Using an additional 7 MMTs of palm oil to move to the 50% blend rate would have a massive implication for world veg oil markets with palm oil already trading above soy oil and SE Asia. Amid tightening supplies of son, canola, and rapeseed oil due to lower plantings and adverse weather, a more friendly outlook is emerging for world veg oil prices. This is why palm oil has been gaining over the past few sessions.

World geopolitical tensions are on the rise as Israel sent 100 warplanes to swoop across Lebanon to take out thousands of Hezbollah missile launchers in a preemptive strike. Also, Russia sent waves of drones and guided bombs against Ukraine. The news pushed gold and crude oil values higher overnight. US futures have digested considerable bearish US supply news, with seasonal lows often forged into the September delivery window. Non-US grain supplies worldwide are in decline, which has placed US exports at an advantage, especially with the recent weakness in the US dollar.

Weather models have extreme heat early this week, with highs ranging in the 90s to lower 100s across areas of the central Midwest. Meanwhile, widely scattered showers with some severe are forecast for the N Plains and the upper Midwest, with hail/strong straight-line wins likely tonight and Tuesday. Cooler air pushes southward by late week, but the extended range forecast returns to a drier profile on Friday. A couple more rains are needed to keep high expectations for corn and soybean crops to finish fully. Unfortunately, it can take a considerable amount of time before everyone across the Midwest has a chance of receiving these needed rains.

It was another lower week for live and feeder cattle futures, with a softer start anticipated today ($0.50-1.00 lower). The August COF report was slightly negative, with a placement number of 2% above pre-report expectations. Last week, the negotiated fed cattle trade was lower in all regions, with live sales in the north $4-6 lower at $184-186. Dressed sales were quoted at $3-5 lower at $ 293-295. In Nebraska, live sales were unchanged from a year ago, and I was sales were off $2. Live trade in the South was $1-2 lower at $183-184. Compared to a year ago, Kansas sales were $5 higher than a year ago, and Texas sales were up $4.

Box beef values last week were also lower, with the choice cutout down $0.11, but the rib primal was up $10/CWT at its highest price since early July. The COT report showed that in the week ending August 20, funds sold 3004 and contracts against commercial buying of 766. The one-week change in price was down $3. Index fund length is now the lowest since mid-May. The cash market has been correcting, with the CME already pricing in a significant fourth-quarter correction. If live cattle fail to produce stability in the futures, then a downside target of $170.00 should produce major support.

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