After a soft night in trading on pricing, the morning wakes up to a mixed morning with minor strength in wheat while beans and corn find a near stable start to the day. As always, we are dealing with a lack of fresh news and low-volume action with players unwilling to establish large positions ahead of Friday’s WASDE report.

Weakness overnight initially was tied to Pres. Trump threatening to raise import tariffs to 100% on imported Chinese and Indian goods to end their purchase of Russian oil and prodding the EU to do likewise. The EU will unlikely follow suit, as they need Russian energy. By the end of the morning trade, that weakness had subsided.

It’s becoming very apparent that the US corn and soybean yields have been trimmed by recent weather, but the question is from where, and how much. Have we trimmed corn yield from the USDA’s 188.8 bpa or from a lower number that privates have released? A bigger question is if the USDA does trim yield, where will they attempt to trim demand. Right now, only the residual category seems to have enough stocks to give up demand. Ethanol, exports, and feed do not look to decline from current usage levels. Trade is heavily focused on corn, but any cut to soybean production will have a bigger impact on stocks to use, and that is what drives values. Very little change is expected to wheat balance sheets this Friday. The next two sessions will be spent getting final positions in place ahead of the monthly data. 

The August PPI (Producer Price Index) released this morning showed inflation receding. It was anticipated to be up .3 %, but it came in down .1%. This has metals and energies higher, while the US dollar index again continues to slip lower. A weaker dollar will eventually add value to agricultural commodities by helping them compete on a currency basis for exports.

US lawmakers from oil refining states announced legislation that would put big oil fighting against big ag. They are producing legislation preventing the EPA from reallocating Small Refinery Exemptions, known as SRE’s to big oil. The bill is titled the Protection Consumers from Reallocation Costs Act 2025. The bill is to prohibit EPA from reallocating SRE/RVO’s that could hurt consumers. The bill is being watched for passage, but will Pres. Trump sign it?

Yesterday, feeder cattle futures plummeted the $9.25 limit, with live cattle also sharply lower. Expanded limits are in place today, with live cattle capable of trading $10.75 and feeder cattle $13.75 for the session. A softer start is anticipated. Technical liquidation got underway from the start, with feeder cattle closing limit down within the first hour and ½ of the session and staying there for the rest of the day. Given feeder cattle leading the decline, one has to question if there is something in the works at the USDA to slowly start to reopen the Mexican border. If that were a correct assumption, then we should know something within 36 hours. Otherwise, the liquidation being heavy from index funds could be a reallocation of money, which possibly could moving into the grain trade.

Yesterday’s box beef trade was mixed with choice cutout off $2.02 at $407.67, while select rose by a $1.62 trading at $386.96. There was some light trade in Nebraska yesterday at $375-378 on a dressed basis, which was off $5-$8 from last week. Dressed trade in Iowa was quoted $1-8 lower at $375-382. But the break on the board and the softer early week sales, the negotiated cattle trade is expected to be lower again this week for the second week in a row. Almost unheard of for months.

A close below 350 on October feeders today again would technically indicate a major high occurred at our measured move high near 370 (Golden ratio measurement in prior videos), with an anticipated stall out also targeted for late August (actual high August 27). Tops always come when not expected, and against the prevailing opinions that it can never end. The cash does not lead the board lower at a top, the board typically precedes it. Today’s close will be paramount in knowing what kind of trade will continue into September/October.