Grain futures opened soft in the evening but were uneventful until early morning. At around 6:00: a.m. soybeans turned sharply lower as Argentina announced it would remove its grain and soybean export taxes to boost dollar supplies for its fledgling government through October 31. With soybean sales already starting to soften due to a lack of Chinese demand, soybeans have put their focus back on sales and not the potential lowering of yields. With China sitting on record port stocks and negative crush margins, this demand will unlikely return anytime soon.

Yields remain mixed, with more reports of the US corn crop simply dying rather than maturing. This is also seen in the US soybean crop, as dry down has been occurring exceptionally fast. Prominent bears who forecasted corn yields at 190 BPA two months ago are now lowering their yields to 185 BPA. Meanwhile, reality checks with yields being reported at or below last year's in portions of Illinois, Indiana, and Ohio have the corn yield barely over 180 BPA. The stocks report from the USDA on September 30 will probably try to raise last year’s yield and increase old crop carryout a bit to prepare for the October 9 crop report that will again reduce yields.

The September cattle on feed report on Friday verified the tight US cattle inventory has not started to rebuild yet. As of September 1st, the US had 11.1 million head of cattle on feed, 1% less than a year ago and in-line with expectations. August placements were low at just 1.78 million head, down 10% from last year. August marketings were the lowest since record keeping began in 1996 at 1.57 million head. This was a sharp 14% reduction from last year as the US finished cattle inventory remains light. Producers are also again holding animals to heavier weights. These numbers indicate little relief from the current high retail beef costs.

As the week ended, the cash feeder index was down $2.45, while September feeders rallied smartly, narrowing that spread to within $1.50. Cattle slaughter last week fell by 13,000 head to a 4-week low of 552,000 head and was 62,000 less than a year ago. Even though there was less product, box beef supply still fell $18-19/CWT on reduced seasonal demand.

A new case of screwworm was found just 70 miles from the US/Mexican border over the weekend. This will cause the US/Mexico border to remain closed through the end of the year. This movement northward of the New World screwworm will have the cattle industry on pins and needles. Both live and feeder cattle are in recovery waves, which are labeled X waves. This allows December cattle to rally to 238-239, while November feeder cattle will have resistance initially at 354, but more prominently at 360.