The grain trade is softer on concerns over China and Railroad.
Grain futures are starting the morning softer across the board after a mixed overnight trade as farmer selling has been the theme post-report and concern for the upcoming potential rail strike, along with the significant export sales data release from the FSA we will receive on Thursday. Sales data may prove disappointing for corn/wheat but supportive for soybeans if China has been actively bookings since August.
It’s being reported that the Biden administration is considering new economic sanctions to apply to China as a preventative measure for a future invasion of Taiwan. Any news of China sanctions would cause further deterioration in US/Chinese relations. If the sanctions were enacted, obviously, China would retaliate against the US. The Biden administration wants to look tough against China heading into the US midterm elections. The US has already banned high-end US computer chip shipments for a decade. China will try to secure its ag goods away from the US whenever possible if this is implemented. Also, amid China slowing economy due to the zero Covid posture, new sanctions would not bode well for future US ag export potential, with China being the US’s largest ag import customer.
US railroads are preparing for a shutdown on Friday as unions and management have not been able to reach an agreement. Smart TD and the Brotherhood of Engineers/Trainmen are the holdouts. Only Congress now could intervene to end the potential strike that can start Friday night.
Central US weather models have a progressive pattern with above normal temperatures and below normal rainfall, which will speed the beginning of harvest along. No Midwest frost/freeze risk into September 27 is noted. Again, Gulf hurricanes remain absent, although the Atlantic activity is elevated.
Live and feeder cattle tumbled yesterday with the sharply lower stock market, while the cash cattle market in the Western Plains and Midwest were quiet. A few loads traded in NE and the IA/MN region for $143, which was around steady to $1 lower. The midweek outlook remains steady. The NASS September Cattle on Feed report is next week. Seasonal beef and cattle price trends are usually steady to softer through September, with trends improving in October.