Soybeans overnight pushed new post-harvest recovery highs

Today through Friday, we finally get some data to work with. CONAB released its estimates this morning for Brazil’s new crop at a record 177.6 MMTs and its export forecast at 112.1 MMTs. Soybeans maintain strength this morning despite that number, as a growing thought is developing of a yield below 53 BPA on beans on Friday. Later today, we get the weekly ethanol report numbers, and then of course, Friday is our first big report from the USDA in over 60 days.

Numerous analysts suggest the upcoming USDA report may be unreliable due to the recent government shutdown, as data collection has been disrupted. However, that concern appears to be largely unfounded. The USDA has continued collecting its usual data throughout the shutdown period, so the core datasets used in this report should remain consistent with prior months.

The real concern centers around low farmer participation in USDA surveys. Response rates have reportedly dropped below 50%, introducing a higher margin of error and increasing the risk of data gaps, especially at the state and county levels. These survey responses play a critical role in yield estimates and on-farm stocks reporting. So while the infrastructure for collecting data has remained intact, the reliability of the numbers may be challenged more by limited farmer engagement than by the shutdown itself.

More areas across South America are beginning to report a need for rainfall, but overall weather and soil conditions still support crop development for now. These reports are being closely watched as the region moves deeper into the critical stages of its growing season.

On the trade front, the market has not seen any confirmed soybean purchases from China in the past week. This absence is raising doubts about future Chinese buying, especially in light of reports of record-high soybean stocks within the country and with Brazil’s harvest season rapidly approaching. The availability of cheaper Brazilian beans could further reduce China’s incentive to source U.S. supplies in the near term.

Despite the lack of Chinese activity, U.S. soybean sales to other global buyers remain above expectations, providing some underlying support to the market. That strength, however, is being tested as traders turn their full attention to tomorrow’s USDA WASDE report. With few fresh headlines to trade today, much of the session is expected to revolve around positioning ahead of that key data release.

Both live and feeder cattle prices were under pressure yesterday, except the November feeder cattle contract, which expires in four days. The cash feeder index was off $2.09 at $340.67. This is the lowest price since August, and the board is converging for expiration next week. So far, it’s been a quiet week on the negotiated fed cattle market, but there was a light test in Nebraska, which was lower by $2 than last week’s average price at $357. Yesterday afternoon’s choice cutout price was down $4.77, with select down $0.14.

Yesterday, the market saw tariffs removed on coffee and bananas. The market fears that with Pres. Trump is in Brazil for the Climate Summit, and further trade talks are continuing, will be including other tariff reductions. Beef has yet to see the rumored tariff reduction; this is what’s keeping the market on pins and needles after the recent sharp bounce from last week’s lows. The Mexican border is likely to stay closed until sometime in the new year. The next shoe to drop is what will happen to Brazilian beef tariffs, currently set at 50%. The rumor early last week was that it would go from 50% down to 10%. Beef imports have continued from Brazil, but at a substantially reduced rate compared to July 1.