Stability comes to the grain trade overnight.
Grain Overview
The grain trade finds overnight support from Wednesday’s giveback and is now prepping for Friday’s big USDA data. Harvest reports continue to indicate wide variability in US crops, which is not surprising but makes it difficult to predict final crop size. We are seeing more interest in global production numbers now that the US growing season is coming to a close, with more of an emphasis on El Niño impacts. Asia is already seeing the impact of this, with crop losses being reported in several countries. Dryness concerns in northern Brazil, with flooding in the South, are not hitting the concern radar button for now.
Estimates for Friday’s October WASDE show the trade looking for a 0.8 bushel-per-acre drop in corn yield to 177.7 bpa from the September report. As was the case ahead of the last WASDE, the range of trade guesses remains wide, with estimates spanning from 173.2 to 182.1 bpa (with 16 out of 21 guessing in a 1.00 range from 177.5 to 178.5). The trade is not expecting any change to soybean yields, leaving the national average at 52.8 bpa. Corn production is projected to decline by 79 Mil Bu, while soybean production is expected to be virtually unchanged or show only a slight decrease.
2026-27 U.S. ending stocks estimates ahead of Friday’s WASDE are calling for a 103 Mil Bu increase in corn carryout, a 5 Mil Bu decline in soybean carryout, and a 4 Mil Bu increase in wheat carryout compared to the September report. Trade estimates remain widely dispersed, particularly in corn, where projected ending stocks range from 1.518 Bil Bu on the low end to 1.895 Bil Bu on the high end.
Global milling trade is growing outside of the Black Sea, with French milling wheat trading within $0.15/bu of the September 1 continuation high. With yesterday’s sharp retreat in US wheat values, support developed overnight again, prompting a small rally in the night session. US wheat sales remain slow as values are still elevated to the world price. The current strong dollar is also a headwind, but as soon as EU wheat offers start to escalate in price, the US will catch some bids.
There’s no question corn ethanol continues to grow, with US ethanol exports having grown to a minimum of 180 Mil gal/monthly exports to Asia. Elevated cash prices in Brazil will help push our domestic prices higher. US ethanol exports in August totaled 212 Mil gal, which is a record for the month. Exports to Europe have soared along with the tightening balance sheet there since 2023. Ethanol prices in southern Brazil are at $2.22/gal, with Midwest swap prices at $2.04-2.10.
Fieldwork is wide open, with the tropical storm bringing moisture up into southern Illinois/Indiana and all of Ohio by Sunday. The Western Corn Belt stays dry until next Wednesday, when rains are forecasted. Through this week’s harvest, it’s interesting that corn continues to vacillate above $5.00. End users are not backing away from buying into the September Stocks Report break.
On a quick note, with a full week of tabulating for the estimated Crop Insurance Harvest Average Price, corn is $5.01, and soybeans have printed $12.89. Corn is up 8.5% from the spring price, with soybeans gaining 16.2% to date.
This morning’s weekly Export Sales report is not expecting any exciting numbers. A flash sale of beans to China this morning would be encouraging, but their holiday doesn’t end until today.
Crude oil is up $4.00 today, but that doesn’t excite the grain trade anymore like it used to. After several large price movement sessions, the next 24 hours will likely see price ranges tighten up (unless social media blows something up).
Cattle Overview
Yesterday’s lower trading action in the cattle market was not unexpected. The surprise came when Tuesday’s large gains were only seeing mild corrections and then setting up a mixed close. Even deferred feeder cattle that were higher by $9.00 on Tuesday only gave back $0.75-1.00. It’s early, but Nebraska has cattle offered at $228-230. No bids or early cash trade have been reported.
Yesterday afternoon’s boxed beef was disappointing, with choice off $3.31 at $375.62 and select lower by $2.13, putting them at $354.21. It did prompt movement of 114 loads, with 76 choice, 15 select, 16 ground beef, and the balance trim. October live cattle closing above 221.65 is now the second-highest close since the August low. With only 3 weeks left, it’s indicating that the cash improvement is here to stay.
The feeder index continues to hold up well in the 337-339 range, while the one-day index vacillates wildly. Some sale barns reported that feeder steers under 450 pounds are sharply lower, while anything above that weight is selling sharply higher.
December cattle are knocking at major resistance at 224.25-224.50. Successfully climbing back above that for the first time since early July indicates December cattle’s earlier-than-anticipated ascent to 227+ is occurring. Support is now risen to 221-221.50.
November feeder cattle stayed well above the magical 333 number in yesterday’s retreat by a considerable amount. The break in nearby and deferred feeder cattle contracts compared to Tuesday’s gain was minimal, suggesting that further upside price potential continues in play. Hourly support is substantially below the market at 331-331.50. That’s the major friendly momentum number. Technically, the current rally targets November feeder cattle at 344 by just using simple measured move theory.