This morning's grain trade is mixed with outside markets sharply higher

This morning’s grain trade is softer despite a surge in outside markets with metals, energies, and equities recovering lost ground that occurred after the Federal Reserve announced a cut of .50% on the Fed funds rate. Outside markets initially rallied on the data and then collapsed suddenly into Wednesday’s close on likely planned profit-taking in anticipation. The overnight recovery puts the outside markets back on par with where they were after the data was released. The delayed financial market optimism is tied to the reality that another .50-.75% interest rate cuts will occur this year and a few reductions next year. Financial markets are signaling the central bank will do a total of 1.25-1.50% rate cuts by the middle of 2025.

The grains did not participate in the broad overnight rally, as weekend hedge pressure is anticipated. Export sales data this morning was optimistic for soybeans, having seen 1.75 MMTs of beans sold. China has returned from its Autumn Festival, and the trade is waiting to see if a larger-scale buying from them will occur.

It’s being reported by UAC (Ukraine’s leading farm union) that the Ukraine 2024 corn production crop is collapsing to 21-22 MMTs, with exports being cut in half from last year at 15-17 MMTs. Ukraine needs five MMTs for the domestic market. WASDE, on the other hand, had Ukraine producing a crop of 27.2 MMTs with corn exports at 24 MMTs. Interestingly, every crop worldwide (Brazil, Argentina, Ukraine, Russia) appears to be substantially less than what the USDA wants to carry on its balance sheets. The Ukraine corn harvest is underway, and yield reports continue to come in dismal, raising interior prices as farmers struggle with sharp profit falls.

Indonesia has issued new palm oil export tariffs, starting Saturday, which will boost its competitiveness against rival oils. The new crude oil duty is 7.5%.

The extended weather models are starting to offer rain for Northern Brazil in the closing days of September and early October. The GFS has a few chances of light rain with totals less than 1.00″, but the EU model is offering showers of .5-2.50″. The models go back and forth on amounts, but they are seasonal. Better rain for Northern Brazil will arrive in October. The dryness in northern Brazil has made for anxious trade, which has stayed dry and hot since May, causing wildfires across Northern Brazil's cropping regions.

Rains in the Midwest should occur after Friday after extreme dryness has produced a flash drought. The rain will have limited benefits for row crops but will help with winter wheat seeding that is getting underway for germination. The rain starts to fall across the West Midwest late Friday and will spread eastward through the weekend. This morning's maps are wetter than in recent days, boosting confidence for the rain. Nebraska/Iowa/Northwestern Illinois will be favored, with the heaviest totals exceeding 2.00″.

Live and feeder cattle futures were firm on Wednesday’s close, with a better outlook offered this morning due to outside markets. The trade through midweek has been in a narrow range, and cash trade is waiting to take place. Better interest is expected to develop today with asking prices in the South quoted $184-185 which would be $4-5 higher for the week. Packer bids remain elusive. Box beef prices fell yesterday, with the cutout for choice down $2.53, putting it down $3.53 for the week. By $4.42 for the week.

The September Cattle on Feed report will be released this Friday at 2:00 p.m. Average trade estimates have August marketings at 97%, placements at 99%, and September 1 feedlot inventory at 101% of a year ago. If realized, the placement rate would be the lowest in five years. October live cattle continue to struggle at the 180.50-182.00 price range, anticipating a cash discount into October.