Wheat leads overnight strength.

Overnight grain trade reflected weakness in the soybean market due to further selling in soybean meal, while corn retreated slightly, with wheat building on yesterday’s recovery. Overnight French milling wheat gained $4.00/MT and had not taken out at September low in Monday’s weakness when trading and digesting Friday’s crop report.

Bond markets are pricing in 50% odds that the Fed will raise interest rates again in 2023. This is supportive to the strong US Dollar that is trading at 10-month highs. This is well known and likely priced into recent weakness. October starts a seasonally bullish time of the year for Ag markets but needs catalysts to encourage funds to go long, i.e., better export demand, SA weather, improved macro mood/weaker Dollar vs other commodity currencies.

The USDA Grain Crushings Report reported 442.6 mbu of corn was used for ethanol production in the US in August vs 455.2 mbu the month prior and 430.6 mbu last year. August dry mill DDGs were at 1.783 MMT. The Monthly Oilseed Crush Report Summary reported the US soybean crush in August at 169 mbu, below the average estimate of 171.6 mbu, and down solidly from July’s 184.8 mbu. The USDA reported August US soyoil stocks lower at 1.772 billion lbs compared to 1.840 billion lbs expected. Soymeal stocks were pegged at 280,355 tonnes.

China returns from its Golden Week Holiday later this week, which should produce buying interest in the soybean complex after what is probably the building of a first the month low. Argentine dryness is becoming more concerning, with another fall and winter wheat ratings expected on Thursday. The dryness is an issue because El Niño normally correlates with near to above-normal rainfall for Argentina, and rain has been absent for months.

Australian weather features rain for Victoria, the far eastern portion of Australia, with dryness elsewhere. The South American weather pattern maintains abnormal dryness and appears to be stuck with dryness in Argentina and Northern Brazil, while rainfall is to abundant for S Brazil. Below-normal rainfall remains the trend for Ukraine in SW Russia for another 10 days in the wheat growing regions. Ukraine indicates farmers have planted 3 Mil hectares of winter crops with 1.7 Mil hectares of that being winter wheat, which is only 40% of last year. Dryness is causing the new seeding to be limited until rain materializes.

Live and feeder cattle closed firm on Monday, recovering from the prior week’s persistent weakness. Even with corn up over a dime, feeder cattle marked the best gains. Active trade is expected to build in the last half of this week. Negotiated trade last week was light, with packers buying close to 74,000 head versus 87,000 the previous week and just over 100,000 had a year ago. Of those purchases last week, nearly 50,000 head were for 1-14 day delivery, and close to 15,000 head were 15-30 day delivery. No live negotiated steers were bought in Texas last week, and IA/MN region volumes were down 41% from the previous week. Box beef picked up $2.30 yesterday, and select was $0.94 higher. A seasonal low should be forming during this time window. December cattle maintains major support at 186.00.