Grain prices have a higher weekly close in the works, while cattle will struggle this morning.
Grain Overview
The overnight grain trade pushed higher, with wheat leading the way as it pursued new August price highs, throwing support to corn and soybeans. Russia is not showing interest in joining Ukraine in any talks that would protect Black Sea shipping, especially after Ukraine attacked and severely reduced operations at Russia’s largest deepwater loading facility at Novorossiysk.
It appears the crop situation across Europe is considerably worse than Wednesday’s WASDE numbers suggest. Drought and disappointing harvest results continue to reduce available supplies, with cash buyers becoming more aggressive and Baltic wheat reportedly heavily committed through September. Germany has not released a new official nationwide wheat production estimate this week, but continued drought and disappointing harvest results are raising expectations that the crop could be reduced further. Similar concerns are developing across Poland, Hungary, and the Czech Republic.
European corn may be an even bigger problem. Private estimates are moving toward just 45-46 MMT compared with USDA’s latest 50.2 MMT forecast. Continued August dryness is also raising concerns for winter rapeseed planting.
The Black Sea offers little relief. Despite USDA raising Ukraine’s wheat crop by 1.4 MMT, exportable supplies appear increasingly tight, and shipping disruptions remain a major obstacle. Ukraine may struggle to export more than 2-2.5 MMT of wheat this month, while Russian grain exports are projected well below previous expectations. The physical grain market appears to be tightening considerably faster than the latest world balance sheets are showing.
Corn, soybeans, and wheat are all poised for higher closes this week over last week, with the August WASDE and NASS reports behind us. What’s in front of us now is the Pro Farmer Crop Tour, which will offer its volatility as various regions offer up the latest production prospects for this year.
Higher weekly closes today would help confirm that June 30 was a significant price low for the 2026-2027 crop year and that a grinding, begrudging trend higher is setting in place. The marketplace is having a difficult time accepting that things can be price-friendly and not price-negative, which the past four years since the 2022 highs have conditioned it to expect.
Cattle Overview
News out yesterday afternoon that you’ve likely heard is that Tyson Foods plans to shutter two beef processing plants and sell another. These are smaller plants, handling roughly half the cattle of a typical large facility with 5,500-6,000 head/day capacity. Tyson is closing its Joslin, IL, facility (~3,000 head/day), plans to sell its Pasco, WA, plant (~2,000 head/day), and will shutter a beef packaging facility in Utah. Capacity will shift to more strategically located facilities, with a second shift added in Amarillo, Texas, as needed.
This news is another story that helps explain why deferred live cattle contracts have collapsed from their late-June highs to $12-15 discounts to last week’s cash trade. It was obviously no surprise inside the corporate structure or to large feeding facilities providing contract cattle to Tyson. At face value, plant closures are bearish for competition for cattle. But be leery of a market that opens sharply lower and quickly recovers.
We’ve seen this since last fall, where a major news event following an extended cattle decline ends up trading the price low. Witness July 27, when USDA announced the US border would reopen to Mexican cattle. That day marked an important low.
Yesterday, Choice boxed beef jumped $3.62, while Select slipped $0.57 on movement of 113 loads. Light cash sales in Iowa were at $232, while Nebraska saw volume at $228-230 and dressed trade at $362-365. Cash prices are going to be lower this week as packers have contract cattle available and board leverage may encourage feedlots to move cattle and capture the improved basis.
By the numbers, October cattle hit 219 yesterday, and that level will be severely challenged this morning. A close below the July 27 low at 216.95 would project a break toward weekly chart support at 210-212. Note that 215 is also the 78% retracement from the November 2025 low to the April high on the continuation chart. That might be the number they dance with this morning. Today’s close will be very telling.
September feeder cattle challenged 334 yesterday and recovered sharply into the bell. Here too, 334 down to the July 27 low just above 330 may get challenged to see if the significance of those values can hold.