Grain prices rebound from overnight weakness, with a potential turnaround Tuesday ahead.

Grain prices were pushed lower overnight, but early morning short covering has cut losses substantially. Ukrainian officials reported that a bulk carrier departed from Chornomorsk (Black Sea port) for an Asian destination, loaded with a shipment of wheat. The interesting part is that it is stated in this news story that they are carrying 3000 tons of wheat, which is 112,500 bushels. That is some amazing wheat to create such a bearish influence late Monday into the overnight session. The overall sentiment is obvious, can they pull it off, and then does this lead to another larger purchase of wheat?

China is said to have bought 600-720,000 MTs of French wheat and is bidding for additional supply for shipment from November through March. Last year, China purchased 12 MMTs of wheat last year, making it the world’s largest wheat importer, and is expected to order a similar amount again this year. With the drought in Australia/and wheat production, China is moved to French wheat, 11.5% protein at $253-257/MT.

The Federal Reserve meets today with their interest rate hike announcement tomorrow. Bond yields reflect a more than 50% chance they will not raise rates tomorrow but will likely wait until November. The macroeconomic environment is sending mixed signals for Ag commodities, with crude gaining and inflation expectations growing vs the elevated Dollar and rising interest rates. Crude oil overnight has reached up to $92.68 on the spot October contract, which expires Thursday. This is the highest price in nearly a year, maintaining large profitability for the biofuel producers. Both ethanol and biodiesel producers are enjoying their best margins in years.

Northern Brazil weather has gone even warmer and drier, with limited rain through the end of September, with record or near record heat showing up for the soybean planting areas of Mato Grosso, Goias, and Bahai. Temperatures of 100 -105 are expected for several days. El Niño years tend to produce heat/dryness across Northern Brazil, which can push the bulk of the soybean seedings back in the last half of October. This makes timely seeding of the winter corn crop in late February/early March risky, with pollination occurring during a warm/dry season.

The soybean market continues to be run by index funds liquidating positions, accepting the USDA potential results that national yields could be 50 bushels or better and that farmers will sell beans off the combine and store corn. The October 12 crop report should reveal the gut slot of the Midwest with much lower yields for soybeans that will drag the national average low enough to risk stocks below pipeline supplies, but could be delayed if a federal government shutdown on a stalemate if progress working out the budget by October 1 fails.

Live and feeder cattle were lower on Monday from the get-go, the feeder cattle pacing the decline even with corn trading softer to new five-week lows. Negotiated fed markets are anticipated from this week when Packers are thought to be late bought, and asking prices are anticipated to be $1-3 higher. Last week, Packers bought just over 74,000 head, of which 66,600 were for 1-14 day delivery and 7400 for delivery within 15-30 days. Friday is the August COF report, which may keep new futures buying hesitant to be added.