The grain trade chooses Thursday to relax early week gains.

This morning’s grain trade is softer after three days of relentless buying in the face of harvest. Despite decent export sales numbers this morning, the market is choosing to still relax from recent strength. The corn rally, along with wheat, has started to reveal what we have been bringing to your attention since late August, and now the world is beginning to see that much of the Black Sea has seen one of its driest growing seasons on record, with extreme heat coupling the dryness for much of the year. The poor conditions have been evident in satellite data, with some of the worst conditions seen on record throughout the summer. With harvest beginning, the poor conditions are translating into poor yields, with many expecting Ukraine’s exports to be reduced by as much as half from a year ago, coming in well below current USDA estimates.

Russian FOB wheat is quoted unchanged today at $225-226/MT for Nov/Dec arrival, and so the recent jump in EU and US prices has stayed on par with this but maintains premiums, which still slows our nearby export demand. This can bring about a correction even though the fundamental story remains positive. The US Plains wheat crop will now join the Black Sea and Australia in facing weather threats as no rain is forecasted throughout the next two weeks.

The South American forecast remains consistent in that the general theme is that rain is forecasted essentially 10 days out, and then the 11-15-day forecast continued to trend wetter for N Brazil. It is a monsoonal season upon us, and so rain will likely arrive, but it’s a matter of quantity. The deficits are significant, and 2-4 inches of rainfall is needed on their sandy soils to promote germination. The recent rally has been significant for corn and soybeans, and with next week’s crop report with wide open harvest weather for the Midwest, a reduction of premiums with a setback would not be out of the norm.

The next two weeks will see a major push for the Midwest harvest, with minimal rain also forecasted for the US Plains. HRW wheat seeding will advance under pressure from the calendar, but better rains are needed to spur germination. Active winter precipitation will be desired West the Mississippi to replenish soil moisture ahead of the 2025 growing season. However, in the short term, row crop harvesting will accelerate. US temperatures will hold above normal, with highs in the 60s to upper 80s.

Yesterday's Live and feeder cattle futures moved sharply higher as “Covid” thoughts have consumers buying supplies. It’s true that some large wholesalers were seeing people make a run on toilet paper again and were buying products in fear that they might be unable to restock due to the port strike. This may obviously be premature, but consumers have become touchy about supply constraints since 2020. Yesterday live cash trade was quoted in Texas at $186-187 which was $one-two higher than last week and sales in Iowa were $one higher at $187. Overall, the volume was light but it sets the tone for the rest the week. Elsewhere in the Plains cattle markets were quiet unlimited Packer interest.

Cattle slaughter at midweek is now 367,000 head, up 4000 from last week but 7000 head fewer than a year ago. The beef market so far was lower but still holding onto early week gains. The choice cutout values slipped $0.36 yesterday while select was $137 lower. At midweek, the choice shows a gain of $3.12 and select is higher by $1.85. December live cattle have now moved above this week’s cash trade and are now nearing the summer highs. Major technical chart resistance lies in the 188.50-189.00 range and will need cash markets to continue to rally to push through 190.00 and maintain strength.