Soybeans firm back to early week highs.

This morning’s grain trade has soybeans recovering to near yesterday’s highs concerning dry Midwest weather and the end of September contract liquidation, while wheat futures are correct in price after a two-day price jump from contract lows. In row crops, the index funds are now the big short, as farmers have liquidated their cash position of old crop, leaving funds looking for new sellers to give them an exit plan. First notice day is Tuesday, September 2 when deliveries will be posted.

A record large US Ag trade deficit of $42 Bil is being used by the GOP to criticize the Biden/Harris administration in their support of US farmers. USDA Sec Vilsack attended the Iowa Farm Progress show, indicating that the US bashing of China has played a role in the slop of US exports to China. He also confirmed that US exports to China are off significantly and the reason that they pay attention to what is being said and done to the US.

Chinese imports of US agricultural goods are projected to decline $10 Bil dollars this year from last year putting it now at $34 Bil as China secures a larger share of the imports from South America. It’s likely the US needs to revisit the Phase 1 Trade Authority signed by China in 2019 and demand annual purchases of $35 billion of US goods in a promise of continued US trade benefits. China is anticipated to import a record 111-112 MMTs of world soybeans in the 2023/24 crop year.

Russian spring wheat quality and quantity problems persist due to excessive wet weather during the growing season. Current Russian FOB 12.5% protein wheat is bid at $216/MT and offered at $218, which remains steady. Crop watchers of the 2024 Russian wheat crop anticipate that the decline will still be below 81.5 MMTs. Meanwhile, the French wheat crop is one of the smallest since the 1980s, with over half the crop not making milling quality grade.

On Friday, the EIA will update the June US biofuel feedstock usage estimates. The trade expects soy oil use to expand while canola and yellow grease contributions decline. US soy oil in the world market is trading below South American soy oil offers and even below Pall Mall, elevating its competitive export position. This is why soyoil has been gaining on the crush margins over Soymeal in August.

Weather models for the Central US still consistently predict one last chance of rain across the NW and NC Midwest in the next 24-36 hours before a lengthy period of dry weather unfolds during the first half of September. Where there are opportunities for rain, a chance of 1.00″ may fall that can hold crop conditions. But for a large area of the Midwest, rains of less than .50″ will see crop conditions decline. Midwest rain chances for the first half of September do not look favorable.

Live and feeder cattle closed under pressure Wednesday, with a softer outlook anticipated this morning in another sharp drop of cutout values. October live cattle have found resistance at $180.00. Yesterday, boxed beef for choice tumbled $4.68, and the select was off $2.62, following Monday’s sharp losses. The post-holiday outlook looks weaker and the choice cutout is expected to fall near $295-300.

Negotiated cash markets are still untraded with steady Packer bids being passed on and feed yards looking for higher prices this week. The break in the boxed beef trade may soften the tone to day and tomorrow. Cattle slaughter at midweek total three and 54,000 head, down 9000 head from last week and 21,000 head fewer than a year ago. Despite a lighter kill rate, boxed beef values are sharply lower. October cattle have already priced in a seasonal decline in the cash trade and are carrying a steep discount. For that reason, support needs to hold on these discounts in the $174-175 range or risk further liquidation.