Grain prices push higher as supply concerns continue to build.
Grain Overview
Again overnight, we saw what happens so many times. Corn, soybeans, and wheat pushed to new contract highs, and then by 3:00-4:00 a.m. CT, the seller vigilantes showed up right around when MATIF opened to take the markets off their highs. It’s like they have a destiny to keep prices cheap and create what appears to be topping action.
Yesterday’s news from the EPA, which was disappointing in the short term but affirmed that all RINs will be kept and placed into the next two crop years, along with soybeans losing 2% in the GD/EX condition rating, had soybeans being the lead gainer overnight. Wheat and corn pushed new contract highs by pennies before finding gravity.
Yesterday, EPA granted 1.76 billion RINs worth of 2025 Small Refinery Exemptions to 29 refineries, considerably more than the roughly 990 million RINs EPA had previously anticipated. The important part for corn and soybean producers is this: EPA said it will propose reallocating 100% of the difference between the expected exemptions and the actual exemptions into the 2026 and 2027 Renewable Volume Obligations. EPA says that supplemental rule will be proposed before the end of October.
Basically, EPA said, “We can give the small refiners their exemptions, but we will make the larger refiners pick up the lost biofuel obligation so farmers don’t lose the demand.”
Try as he might, the Turkish President is having difficulties working out another Black Sea grain corridor similar to 2022, as Putin appears hell-bent on putting the finish on Ukraine heading into the winter. It’s 6:00 p.m. their local time, and nothing has been announced as the meetings taking place have concluded.
Also, for those who think grain moving by truck out of Ukraine or Russia and up through the Baltics happens easily, they are greatly misled. Much of Ukraine’s transportation infrastructure has been damaged or is in extreme disrepair, making the movement of grain west through Ukraine and into Poland a slow and difficult process. It’s only a matter of time before grain millers are sourcing European, Argentine, Australian, and yes, US wheat in the months to come.
Iran is still fighting the US, and the Strait of Hormuz remains closed, with fertilizer movement again remaining restricted, which will affect 2027 crops. More specifically, South America is coming up this fall and winter facing the potential for a Super El Niño. Russia is stepping up its attacks on Ukraine, looking to inflict harm on its export business, while Ukraine continues to bombard Russian refining capabilities whenever it can.
Balance sheets continue to tighten and will likely do so again in next week’s WASDE/Crop Production report. The US crop is not heading for a great finish.
There ARE going to be corrections in the grain trade that can be sharp and nerve-racking, but corn and wheat need to rise toward rationing levels, with soybeans also becoming a new concern as yield potential drops toward 52 BPA. The $6.00 range for corn remains a likely target to be achieved, with soybeans crowding $13.50 and Chicago wheat needing to spike through the $8.00 range by a considerable amount to reflect the loss of roughly 15 MMT of wheat that will not leave the Black Sea this calendar year.
Cattle Overview
Yesterday’s cattle trade saw buying interest help overcome some of the oversold levels that have been achieved, but nothing technically occurred to change the downward trend just yet. The feeder cattle index started the week down $3.49 and is at a new low of $329.31 for the year. Last week’s 5-area live sales were off $6.00, with the dressed trade losing $10.00.
Next week is Labor Day week, so it will be shortened, with packers already having procured their holiday needs and new school-year restocking, which is reflected in boxed beef prices slipping last week. Packers won’t be pressing to pay up this week, thinking they have the upper hand right now.
Support has shown up on the Oct live cattle chart now at $210, with building technical support in the 208-210 range. That will be it for now. Resistance is now built in at 220 and will likely take some knocking on for a while. October feeder cattle have similarly revealed the ability to put in a low near 310, even though chart measurements remain open to 303-306, which November feeder cattle have already achieved and will come onto the continuation charts in a few weeks.
As I wrote in yesterday afternoon’s cattle section, there are developing rumors that the Santa Teresa, New Mexico, port of entry may get delayed from opening around September 24, as NWS infections remain concerning farther south of that region. In Douglas, Arizona, numerous animals are reportedly being rejected daily for either source issues or lesions that could potentially carry NWS and are refused at the port of entry and sent back. All is not going perfectly well with the US border opening, but the working talk is that Douglas will remain open while Santa Teresa may be delayed. This could produce a firming trade for feeder cattle.
It doesn’t take much for a trend follower to notice on the feeder cattle charts, more importantly the continuation chart, that resistance on any rally in the short term arises at 321-323, with major resistance at 330-331. It’s the latter that could be challenged quickly if any USDA announcement of a delay in further port-of-entry openings to feeder cattle comes into play.