The overnight grain trade recovers a chunk of Monday’s eroded strength.
Grain Overview
Corn, soybeans, and wheat traded higher overnight as slower harvest and planting progress provided support. Corn and soybean harvest advanced last week but remains behind the five-year average, while winter wheat planting is running roughly 10% behind normal. Year-over-year comparisons aren’t available because USDA reporting was interrupted by last year’s government shutdown. For now, the market is focused on slower-than-normal harvest and planting progress. Rain returns next week, Wed/Thursday, to the already problematic areas.
Wheat is trading higher this morning as more risk premium works back into the Black Sea. Another commercial vessel was attacked by drones overnight in Bulgaria’s economic zone, with one ship sinking and another damaged. Coming on the heels of the weekend attack on a Turkish-owned grain vessel carrying corn out of Ukraine, the trade is once again being reminded just how fragile Black Sea grain movement remains.
Demand is helping as well. Saudi Arabia purchased 683,000 metric tons of wheat, nearly 150,000 tons more than originally expected. European wheat is also higher this morning, giving some additional strength to the U.S. market. For now, Black Sea shipping concerns and better export demand are giving the wheat market a reason to push higher.
President Trump signed an executive order allowing farmers and other qualifying users to temporarily use red-dyed diesel on public highways through December 31 without the normal federal penalties. The administration is also considering delaying or potentially forgiving the 24.4-cent federal diesel tax on that fuel. State fuel taxes are separate, so the final savings will depend on whether individual states follow the federal government’s lead.
Current analyst guesses that are coming in for Friday’s WASDE/Crop Production report are a corn yield at 177.8 and soybean yield at 52.9. The trade is playing it very conservative, leaving the large potential cuts for the November crop report. It should be noted there are numerous yield guesses on corn below 175 and beans under 52, but StoneX put a high enough yield in last Thursday to pull the average up.
Grains this morning are producing a Turnaround-Tuesday recovery of yesterday’s gains that were mostly eroded from early Monday moprning. This is encouraging as and implies end-users are stepping into the market not waiting for it to come to them, especially supporting corn under 5.00. Kansas City wheat sets up a friendly technical close with the settlement today above 753, implying momentum change in trend. September was a down month, the calendar flipped and similar to 2010, October can be a up month into harvest. Watch today’s afternoon video.
Cattle Overview
A 2nd day of losses for cattle futures yesterday after last Thursday’s high-watermark close. The selling was heavy in the early morning hours, which gave way to technical buying interest when live and feeder cattle held key technical areas: the COF gap for live cattle at 218.75 and intraday support was 327 for November feeder cattle.
Rains over pasture areas in late August/September are encouraging some producers to hold back on weaning calves, keeping numbers a bit tighter in some areas when fall runs should normally be picking up here in October. Was last month’s Cattle on Feed report showing such light placements a result of small heifer retention/tighter numbers, or just a short-term pinch with more calves to come in the next 2 months? Either way, in the near term, the feeder index is holding up in the upper 337–338 range, with the one-day moving wildly, with yesterday coming in just under 334.
Yesterday’s strong afternoon boxed beef trade, with choice up $4.07 at $378.26, with select also reflecting a gain of $4.08 at $358.57, is an encouraging start for the week, prompting steady cash trade ideas and a likely firmer start to this morning’s trade. Movement was light, though, at 67 loads. It was mostly choice at 46 loads, 9 loads of select, and almost 12 loads of ground beef. There was no trim.
By the numbers, December cattle have major support at 218.75–219.00. If the gap gives way, then your next support is 217. That support on the December cattle near 217 should see solid buying interest and I recommended buying on February cattle if thier trading below 220. On the upside, initial resistance comes in at 221.50 (likely target today), then the 223 number that you should know by heart, followed by major resistance at 224.50.
In November feeder cattle, they held the 330 range on a closing basis, which is their hourly bar 55-period MA, and this moving average has helped define the rally since the beginning of September. Weakness underneath that will threaten the recent 327 support and then open up a larger break. If that occurs, but is not expected at this time, you will see 324 helping put the brakes on, and then you have the COF gap at 320. On the upside, 333 also should be heavy in your memory as a resistance pacifier number. If that can be closed above, then the spin will be to check out last week’s highs.