China creates stimulus policies, and Brazilian weather is a concern.

Hedge update: We filled out our November bean sales per Weekend Hedger and daily newsletter at 10.45 overnight. We will have further recommendations if the strength continues.

Grain futures pushed higher overnight even though the early night session tried to pull a minor Turn-around Tuesday off, but overnight turned higher on the news that China is doing a stimulus package. After long delays, China finally capitulated and put together a monetary policy and stimulus package. Many of the measures are an attempt to inject even greater liquidity into the market, with a 20-basis point cut to the 7-day reverse repo rate and a 50-basis point cut to the required reserve ratio down to 9.5%, reducing the amount of capital banks are expected to hold back. In addition, the well-advertised cut to existing mortgage rates was confirmed, with an additional cut to down payment requirements on second homes. Perhaps the most interesting part of the package was the nearly $114 billion of liquidity support earmarked for stocks. This large chunk of cash is said to be accessible by the country’s funds and brokers through the Central Bank, though how exactly this will work remains a little unclear. Chinese markets rallied on the news, with further optimism outlined after Central Bank Governor Pan indicated this was just the beginning of support.

Dry weather in Brazil continues to be another driver for soybeans, as concerns continue that the weather models are delaying bringing in meaningful moisture in early October.

Looking ahead, harvest is likely to be a bit start and stop in the Eastern Corn Belt this week as another tropical system is expected to move into the Gulf and head north. The Western Corn Belt looks like it will see reasonable progress. The wetter weather moving into the Eastern Belt will likely help to alleviate some of the pressure put on the pipeline recently with the start of harvest. It could create some interesting pockets in interior cash if delays become prolonged.

Crop condition ratings for corn, which are now coming to an end on Monday, showed 65% in the good/excellent category. The harvest was 14% complete, which is a little behind pre-report expectations. Rain in the southeastern part of the corn belt likely slowed the harvest this past weekend, but the corn belt was able to go again soon. 61% of the crop is mature, which is six points ahead of the 5-year average.

On soybeans, the Monday report showed fair export inspections at 17.8 mb, but total exports after 2 1/2 weeks are down 6% from a year earlier. This pace will need to pick up, but the recent sales pace suggests that this will happen as harvest progresses and more soybeans are available to the marketplace. Crop conditions were reported at 64% good to excellent, unchanged from a week ago. The harvest was 13% complete, at the low end of pre-report expectations. We expect harvest to pick up across the belt as 65% of the crop is dropping leaves, 8 percentage points ahead of the 5-year average.

Live cattle and feeder cattle futures traded two-sided on Monday after Friday’s neutral Cattle on Feed report, with live cattle producing the best performance. Feeder cattle are eyeballing the corn market, making solid gains. The early anticipation is for steady cash this week, with trade likely delayed as feedlots will hold due to the packers having limited cattle purchased for deferred delivery. However, the slaughter pace has slowed considerably to improve boxed beef prices, but that has had limited effect. Boxed beef prices were mixed Monday, with choice up $1.62 and select down $0.80. Feeder cattle futures kept pace, with live cattle neither a leader nor a follower.

December live cattle rallied to a resistance point, while November feeder cattle are shy of major resistance at 244-245. Technically, the markets are overbought and at risk of retreating. Cash market resilience will be observed if it avoids the seasonal tendency to soften into October.