Fund short covering and end-user buying overcome post-WASDE report trade.

This morning’s grain trade is higher to sharply higher following yesterday’s perceived bearish crop yields. Yet, it’s the expectation that the disappointing corn ear and soybean pod counts will see a reduction in yield potential due to the dry finish that the bulk of the Midwest is seen. The NASS raised corn and soybean yields yesterday through record large ear and pod weights, and dry and warm weather will affect the yields in the October report.

August 15-September 15 Midwest weather saw 15% of normal rainfall, a record or near record low for most of the Central US. This was not the finish farmers were hoping for. 2024 corn and soybean yields are record-high, but the September crop report will likely reflect the top end of the record crop yield potential. Actual harvested yield data will be closely followed in the weeks ahead.

Yesterday morning’s strength in wheat is the same as this morning, tied to Russian/Ukraine events. Russia has yet to comment on the military drone strike that hit a commercial grain vessel carrying wheat to Egypt yesterday morning. The grain industry is concerned that the war escalation could include grain charters. Attacks on Ukrainian grain charters might allow Ukraine’s military to strike key Russian grain export ports like Novorossiysk. The worsening war tensions could be a reason why Russia is pushing grain out the door, fearing its ability to financially clear tonnages could be on the decline. Yesterday’s private sale of Russian wheat to Egypt’s GASC was cheaply sold at $212/MT FOB or $5/MT under the prevailing marketplace. Russian FOB wheat is offered at $217/MT this morning.

Northern Brazil weather continues to offer hot/dry weather conditions into late September. Seasonally, Northern Brazil received just 1-2.50″ of rain during September, with better totals arriving in early October. The outright lack of N Brazil rain garners more attention due to soil moisture being at a three-decade low and tropical waterways nearly drying up amid the lack of rain since May. The US soybean market will increasingly focus on Brazilian weather, with a calendar flip into October. Brazilian farmers will then need 2-4.00″ of rainfall for seed germination to commence spring seeding.

Hurricane Francine is seeing its rains end, but showers of.5-1.50″ will occur in the SE US today and Saturday. Light rain will leak into the southern Midwest; otherwise, the E Midwest is bone dry, and crop maturity is being pushed. Small soybean seed size and a portion of top soybean pods will result, with corn impacted by the diminishing starch accumulation.

Yesterday, live and feeder cattle futures pushed higher, with a firm start anticipated this morning. New highs for the week on Thursday were seen in deferred contracts, with feeder cattle today likely being challenged by corn following through on the reversal strength seen after the WASDE crop report. The negotiated cash trade on Thursday was helpful as it took place steady to higher with live trade in the South at $179-181, and the dressed trade in the North was $4-6 higher at $292-294. Today’s trade will likely see similar prices.

Yesterday’s September WASDE report lowered the fourth-quarter steer price forecast by $7 to $183, a record-large cut from the August WASDE report. The Q1 price was reduced $3 to $186. Since 1983, the September WASDE forecast has been too low 60% of the time by an average of $6 and too high 33% by an average of $6. This puts the cash equivalent prices week at $6 under the USDA forecast. Look for October cattle to continue to be trading in a large range in the coming weeks with resistance at $180-182 while support arrives at $173.50-174.50.