Russia raised it's cash price floor.

This morning’s grain trade is softer across the board, with wheat futures having tried to stabilize and traded mixed in the morning hours. Paris wheat futures are higher by $1.50/MT as Russia announced a seller's floor under the cash price of $250/MT FOB. This compares to prices offered last week of $234/MT. Russia has produced seller floors in the past with poor results, as in 2022/23, as exporters then started selling wheat on a CIF, not as a FOB basis, as the export campaign sought to move wheat later in the crop year. The current wheat/corn spread is currently $1.87 premium, making it difficult for Chicago wheat futures to try and rise above the recent high near the 200-day MA. The Russian price hike is supportive of world wheat values.

The situation between Russia and Ukraine seemed eerily quiet over the weekend, with little in the way of major news or attacks on port infrastructure or civilian ships. While we cannot ignore the changes in the war or how they may influence grain movement going forward, it is also interesting to note the change in the export outlook caused by production issues this year. Record setting heat and dryness built into the region, hitting Russia’s production outlook exceptionally hard and reducing Ukraine’s exportable supply.

Over the weekend, the Chinese finance minister did not offer any new outlook for further economic stimulus other than stating that they will help make financing more readily available for real estate. This caused metals and energies to weaken again overnight in a risk-off profile, affecting grain prices' soft tone.

Row crop prices are again drifting lower today as heavy harvest pressure is applied and will be moving from beans to mostly corn. Friday’s crop data, which was close to expectations, has many questioning why the acute dryness from mid-August to October 1 did not have more of an impact on yield. Soybean seed size is said to be less than last year, but corn yields continue to be reported above producer expectations.

China has ramped up their soybean buying in recent months from Brazil and the US taking advantage of the decline in price and in anticipation of possible trade issues between US/China increasing under Pres. Trump. Recall though that Pres. Biden has maintained all current tariffs under the Trump administration but failed to follow through on forcing China to adhere to its agreements to buy US agricultural products in the extension in June 2021. China is aggressively covering needs ahead of January amid uncertainty and is only covering February forward import needs exclusively from Brazil.

Needed rainfall started to fall across N Brazil and Argentina over the weekend, with heavy rain falling across the driest areas of Argentina this morning. The forecast offers near to above-normal Brazilian rainfall for the next two weeks with moderating temperatures. Spring seeding will advance quickly into November across South America.

In the US, variable temperatures are forecasted over the next two weeks, warming following the cold Canadian air early this week. Warm temperatures and an upcoming wetter forecast will slow the harvest, with corn being the crop impacted. The US soybean harvest will be close to being completed through next weekend. The US corn harvest should be 50% completed by next Sunday.

It was a higher week again for live and feeder cattle last week as cattle found strength in the cash market. October cattle traded at the highest price in over a year and is the second-highest price contract on the board. Negotiated fed cattle trade held until late week with higher prices in all regions. Live sales in the north were quoted at $187-188, which was steady-$2 higher, while the dressed trade was steady at $296. Live sales in the South picked up $1 and traded at $187. This week, the outlook is steady.

Cattle slaughter last week slipped to a 4-week low as packers slowed the kill due to weak margins. Slaughter of 586,000 head was off 25,000 head for the week and 30,000 less than a year ago. Later production supported box beef prices, lifting choice nearly $9 on the week while select was just up $1. The COT report showed another week of good fund buying of 13,622 contracts against commercial selling of 11,280 contracts. October cattle gained $4 on the week while December picked up $2.70. Index funds have become bullish on cattle, but the cash market will be needed to accelerate to push through nearby resistance in the 188.25-190.00 range.