The grain trade reverts to sell mode.
After several days of price recovery, yesterday, wheat led the renewed decline in the hard wheat contracts, and then overnight, soybeans are also on the retreat. The culprit of course continues to be poor exports, and this morning’s export sales again were just mild, as expected. Meanwhile, yield reaction remains very variable, with some areas having good crops, while the central Midwest reports disappointment and yields. It’s becoming likely that the US government will shut down on October 1, putting the October 12 crop report at risk of being delayed, but historically, most shutdowns over the years have only lasted a few days. Only in 2019, it lasted 35 days as Pres. Trump tried to force Democrats to fund the Mexican border wall. We will see the September 1 Stocks data this Friday, September 29.
The first notice day for the October soybean oil and soybean meal contracts is Friday, with 0-150 contracts of soil and 0-50 contracts of soybean meal expected to be tendered. Cash soy oil on the rail basis is five cents over Chicago futures, while soymeal is offered at a $15/ton premium. There are only 67 contracts of soil and 24 contracts of soybean meal registered for delivery as of now. The strong cash market basis urges against large soybean product deliveries.
China has officially confirmed that it has standardized requirements of soybean seed moisture at 13%, which will start on December 1. The last time China made a soybean seed moisture content standard was back in 2009. China also has tightened its requirements on broken and split soybean seeds in cargoes. This is more difficult for Brazilian soybeans to attain than US soybeans.
With low open interest and algorithm computers controlling trending action without being given compelling trend-changing news, the action remains lethargic with a soft bias in the trade. There is potential friendly news coming for corn and soybeans on Friday via residual usage for corn lowering the carryout, and last year’s soybean yield potentially being adjusted lower. October 12 is the first real-life plot sampling that the USDA can produce, and many years in the past it’s the October crop report that can change the dynamics in price trends. Hopefully, the US government is operational.
Most of the Argentine crop area remains bone dry, while some showers are increasing for south-central Brazil to facilitate some planting and Parana. Meanwhile, it’s another dry week of weather for Ukraine and SW Russian crop areas that put planting of winter wheat into concern. In Australia, the southeastern portion of the continent picks up some rains, but this will only cover about 30% of the wheat growing area that is suffering under extreme drought measures from El Niño.
Live and feeder cattle moved sharply lower yesterday, with another steady/week outlook offered for today. Ongoing concerns of slowing restaurant traffic have deferred contracts under correction, as high-end cuts in the wintertime are mostly sold through restaurants and not backyard grilling. Negotiated fed cattle trade is slow at midweek, with light sales reported in the north of $184, which is $1 lower than last week, while dressed sales were $2 lower and $290. Steady to lower price trends are now expected for additional trade that might develop in the last half of the week. November feeder cattle have now lost $13 and eight days and are the most oversold since mid-June. There is support at the 100-day MA near $250.