The board remains firm despite harvest pressure.
Morning Grain & Livestock Update
Quick read market color and key levels
Grains
This morning, the grain market is firmer again, led by the friendly soybean market. After brief rain delays in some areas this week, harvest should be moving forward through the weekend, with the bean harvest surpassing 80% and corn likely well beyond two-thirds. With sales slow across the scales other than pre-sold grain deliveries, end users are reaching for the crop, raising bids, and firming the board to entice more selling before the crop gets completely locked away.
November options expire this Friday and First Notice Day is next Friday.
Weather and Trade
Better rains are forecast for parts of Brazil and Argentina this morning, but several areas remain dry. With a need for large crops and a weak La Nina developing we are going to see more interest in southern hemisphere weather this year. Trade continues to monitor US trade talks, mainly with China. Talks appear to be making progress, but President Trump’s comments that a meeting with President Xi might not take place weighed on the market yesterday. While this may not impact trade deal progress, it was not viewed as positive by trade.
Corn Balance Sheet Talk
It’s becoming a widespread conversation that the corn yield is likely in the 180-185 BPA area, much lower than what the USDA and StoneX tried to push in August and September. If the lower side comes in, our new crop carryout gets tugged below 2 Bil Bu, which could encourage a corn rally back into the 470-490 price range in the winter. This is especially important if President Trump is successful in holding China to a trade deal similar to the Phase 1 Deal he secured back in 2020.
Macro and Flows
Headlines will become even more important as we head into the weekend, as the world prepares for the APEC meeting in South Korea late next week. President Trump is anticipated to meet President Xi for negotiations along with President Lulu of Brazil. Also a large correction has gotten underway in gold and silver and is seeing a small rotation of indexing fund investors that may be moving money over to the extremely cheap grains when compared to the valuations of metals. Without the commitment of traders' reports, guessing is done via open interest changes.
Cattle
Live and feeder cattle prices pushed higher yesterday, but not before a rough early start in the morning. USDA Sec. Rollins was on CNBC about 45 minutes before the opening, again discussing that they have some form of a big plan coming to help soften beef prices to the consumer. Since details are sketchy and mostly conversations about opening up more government land for grazing, along with improved market tools (possible changes in LRP), the trade firmed and is dealing with a strong cash market and improving consumer demand that returns after a September slump when the kids go back to school, and the summer has ended.
As negotiated trade awaits late this week, box beef values showed choice gaining $2.75 at $371.93 while select slipped $0.89 to $352.57. We will not have an October Cattle on Feed report this Friday, but we are still getting estimates to keep the trade in mind. Reuters currently shows an average estimate for October 1 On Feed at 98.1%, Placed in September at 91.4%, and Marketings at 96% of a year ago.
Key Technical Levels
Live cattle in December have resistance at 248-248.50 that may be initially difficult to clear in the near term until we get answers on what the administration has on this “Beef” deal, while January feeder cattle have an ominous gap at 373.00-376.75 above it that will take some work to get into. The recovery in feeder cattle has been less exciting than in live cattle, with support for further liquidation in January feeder cattle coming in at 363.00-363.50 on the continuation chart. Breaking that in closing under it would imply a significant top is in place. The cash feeder index has recently slipped, with yesterday's close down $3.16 at $372.99.