After seeing some corrective action in the night session, the grain trade has a firm tone this morning. Yesterday’s gains continued as more US yield data comes in, and suddenly, there is radio silence from firms predicting 190 bpa corn. Heavy disease and drought pressure have some analysts cutting 10 bpa off their previous yields. This is putting more focus on corn demand, and right now, that is above expectations across the board.

Soybean harvest is also picking up momentum, and the big topic for that crop is the low moisture on soybeans. More reports of 8% to 10% soybean moisture from all regions of the US. We are also hearing more reports of two-soybean pods this year which will cut yield estimates. Wheat futures are firmer this morning as disruptions to Black Sea exports and more favorable offers will likely bring the US more export business. Some models indicate this could add 35 mbu of demand to an already big wheat export book.

There have been more reports of crop disease being an issue. In corn, untreated fields had 50 BPA below last year, and treated fields had 20 BPA below. Soybeans are coming in very dry, with many reports of moisture at 8-10%. This week’s crush report showed crush capacity at a record, while the soyoil stocks continue to decline. Add to this that there is doubt being cast on Russia’s wheat estimates. They could possibly be too high.

Near 1:00 p.m. CT today, the market's focus will likely fall on the Federal Reserve meeting data. The Fed Reserve is expected to lower interest rates this month, with the street expecting a 25 to 50 basis point cut. While this would normally be positive, increasing inflation may limit any future cuts. Economists have also bumped their recession odds to 40% following recent labor reports and inflation costs, up 10% from July, as tariff impacts are starting to be felt in the retail market. The big observation that should be occurring is that the US dollar is weakening and is now trading below 97.00, which implies a further breakdown in price is taking place. This bodes well for exports.

Live and feeder cattle futures stalled yesterday after Monday’s sharp rally. A drop in the box beef and word that the cash trade was seeing a soft tone allowed futures to maintain discounts. Yesterday, the choice cutout declined $5.91 to $3 92.62, while select was off almost equally by $5.63 at $373.17.

IA State University estimated cattle feeding returns in August were another month of profits. Returns on finishing 560-pound cans rose $78/head for the month and were $788/head higher than a year ago at $996/head. Finishing 750-pound steers returns rose $81/head higher than July and $533 higher than last year at $630/head.

Cattle futures need to rally today, or risk hinting that technical damage remains from last week’s sharp break, warranting more index fund selling.