Wheat is supported as Saudi Arabia tenders for wheat that it passed on September 7.
Grain Overview
Wheat futures have morning strength, as French milling wheat again pushes higher by over €3.50 a metric ton as Saudi Arabia is tendering for wheat that is not going to be coming out of the Black Sea. It’s a snap tender due today for 535,000 MT of milling wheat. It’s anticipated Europe will capture this bid, and with the euro having fallen sharply, it will be interesting to see what they pay. French milling wheat has rallied every day this week since Tuesday. (Note: This was shown in yesterday’s video.) And with wheat being fungible, at some point the spreads will start to drag US values along. Is October when end-users snap and start seeking new wheat origins? The Black Sea is not open despite tweets and talks.
Corn and beans softened overnight as we got our anticipated high-watermark guess yesterday from StoneX for the October crop production report, and they did not disappoint with the yield guesses of 182.1 for corn and 54.1 for soybeans. Their methodology, primarily a survey of their client base, has not changed in decades. Relying on such a survey is questionable, but that is a secondary issue.
Consider that the USDA recently presented a nearly 200-million-bushel supply surprise, primarily due to a massive number of off-farm stocks. The validity of this figure is irrelevant, but it illustrates how the StoneX survey would likely be skewed. They are asking the same group of people who just reported having a lot of grain what they think about production, especially with early corn harvest stocks likely being commingled with old crop. What I glean from their data is that they lowered the corn yield by 0.8 BPA from the data they put out last month, so they are on track with a lower corn yield trend for Oct. 9.
Harvest delays are starting to pass, and farmers will likely be getting back in the fields this weekend, and next week should be an active one for fieldwork. Cash markets remain strong ahead of this, with some soybean crushers still posting basis values of up to $1.00 over futures to encourage movement. Soybeans have seen a bit of pressure lately from sporadic demand, including from China. Still, China is well on its way to reaching its 25 MMT import obligation but has not shown much interest in additional ag trade just yet. China did drop its tariffs on several US ag products, including corn, but maintains one on soybeans. Corn also is struggling with a lack of fresh news, even though demand remains historically high, both for export and domestically.
Market action will soon start to position itself for next Friday’s WASDE report. This will incorporate the September stocks report data, including the larger corn stocks. The question is whether this will be negated by a lower production number or if the USDA will add demand. The current buzz is that the corn yield average estimate may hover near 177 for corn and 53 for beans.
It’s Friday, and December corn is hovering at 5.00 after taking on the new corn stocks revelation. Harvest pressure will be constant today (along with any feared fund liquidation), which will make a close at or above 5.00 for the week impressive. It’s being reported that end-users want corn at these values, knowing the feast at harvest will give way to famine as crops that head for the bin will be locked away, demanding higher values. Wheat and soybeans will try to sort out their statistical first-of-the-month low potential on price.
Cattle Overview
The cattle trade got underway yesterday with the typical morning volatility but remained firm throughout the session, with expectations of higher cash cattle trade this week. Feeder cattle also moved higher on hopes they could be eating through some cheaper corn. Boxed beef did soften in the forenoon, but there were signs of dressed cash trade still taking place in the 345-350 range, with bids of 226 in Kansas and Nebraska being heard, but I cannot confirm.
The afternoon boxed beef market tumbled and will likely affect today’s opening and keep cash cattle trade steady at best with last week. Even though that’s considered good news, to be steady, the expectation of better cash trade will take the bloom off yesterday’s board price improvements. Choice was down a full $6.00 at $376.79, while Select tumbled $7.70 to $352.89. Movement was brisk at 117 loads, with 82 Choice, 13 Select, 15 ground beef and the balance trim. Cattle slaughter picked up on Thursday after last week’s plant slowdowns in Kansas. Slaughter was put at 109,000 head, 19,000 more than last week and just 3,000 head less than a year ago.
December cattle have vacillated near 223 over the last 6 sessions. A burst through that quickly encounters the 100-day MA at 224.50. A softer start to today’s trade may be in play given the weakness in boxed beef, unless big demand surfaces because of that price offering and improves things today. The rising trend on the hourly chart shows support at 220.50-221.00 as a battleground.
November feeders enjoyed the breakout above 333.00, so that should be the number for support if the market chooses to do its intraday hard dips. Major support on the hourly charts is $0.50 on both sides of 330. Upside resistance and the target for strength is 338.20, the September 14 high on the continuation chart that October feeders put in play. There is a plethora of numbers in play for November feeders to target at 338-344. It’s a big range, but 344 represents 2 equal legs up on the continuation chart from the August 26 low.