Grain prices lower with stocks and commodities on risk-off.

Grain futures are lower this morning, along with most commodities, as the US dollar strengthened towards 105.50 on the Federal Reserve’s hawkish comments yesterday. The Fed’s stated stance that rates will stay higher for longer, sent crude oil, along with other inflationary commodities lower. Chairman Powell’s press conference leaned hawkish, predicting one more rate hike this year. This morning, gold is down $32, silver off $0.72, while crude oil has recovered to slightly above unchanged, a $1.40 off overnight lows.

Of note is that the Brazilian corn FOB basis has been rising recently and now equals the US Gulf into early 2024 at $1.06 over. China has been a massive buyer of Brazilian corn with purchases and shipments estimated now at over 11 MMTs. This has worked to almost clear up Brazilian corn surpluses. The recent rally in Brazilian corn FOB basis has placed US corn into a competitive export position in the world corn market into mid-2024. Brazilian farmers are now unwilling to sell new crop corn or beans on low interior prices, and their current dry/hot weather is delaying the start of soybean planting.

Slovakia said they have reached an agreement with Ukraine to establish a licensing system to trade grains. This will allow a ban on four Ukrainian commodities to be lifted once implemented. Shipping sources said the first ship made it through the “humanitarian corridor” to Turkey’s Bosphorus Strait.

New crop weather worries are developing, but the marketplace continues to let it be a concern for the future. Australian drought will continue to worsen over the next few weeks, with record heat taking a major toll on small grain crops. Southeast Russian farmers are becoming worried about dry soils and 10-day dry weather forecasts for planting winter wheat. The southeast Russian window to get seed in the ground seasonally closes after October 15. Meanwhile, North Central Brazil and Argentina hold in hot/dry trends, which would delay any early corn/soy seedings.

The grain trade is working with current USDA numbers as valid and bemoaning the slower than usual start for exports at this time. Soybean yield data is set to be a surprise to the downside, but if the government is in business, we will get real plot data on October 12. Meanwhile, there’s too much threat to production in South America due to the building El Niño to anticipate a never-ending selloff in grain prices, especially with US corn competitive in the world and the potential for soybean stocks to be drawn down and subsequent crop reports.

Live and feeder cattle futures were higher on Wednesday, while negotiated fed cattle markets were quiet in all regions through midweek. Some light sales in Nebraska were reported at $186, which was $2 higher from last week, but other regions remained quiet. Dress bids in the IA/MN area were quoted at $292-293 with no trade. Cattle slaughtered midweek totaled 374,000 head, down 4000 head from last week while 9000 head fewer than a year ago. The choice cutout lost $0.86 and is now $4.45 lower for the week.

Estimates for this coming Friday’s Cattle on Feed report are August On-Feed at 97.7% of a year ago, Placements at 93.6%, and Marketings at 94.7%.