The grain trade is sharply lower due to a lack of Chinese details and an end-of-the-month flush.
Grain Overview
The grain trade was not happy last night that no new details were coming out from either China or the US as the big optics of getting together are winding down. This morning, the market is still waiting for something concrete from either China or a fact sheet from the US.
Xi Jinping is wrapping up his final day in the US, with no sweeping US-China trade agreement or major breakthrough on agriculture. The biggest accomplishment appears to be stabilization and buying more time for negotiations, with the 60-day extension likely intended to keep the heat on China to buy Ag products through year-end. The trade was hoping for something more tangible, whether that was a reduction in Chinese tariffs on US agricultural products, details on the reported $17 billion agricultural purchase commitment excluding soybeans, or additional progress on a broader trade agreement. So far, none of that has surfaced.
There had also been discussion ahead of the summit about reciprocal tariff reductions on roughly $30 billion of goods and establishing a more stable group of products, including agricultural goods, that could be kept away from future trade disputes. Details remain limited, leaving the grain markets waiting to see what comes out after the summit concludes.
Wheat is dealing with a similar wait-and-see situation in the Black Sea. The market has been pricing in hopes that Russia and Ukraine could eventually reach an agreement covering energy infrastructure and Black Sea shipping after Secretary of State Marco Rubio said both sides were open to discussions, with their ministry officials invited to a New York meeting. No date is set, and the problem is that the fighting has not stopped. Russia launched another major attack on Odesa yesterday, with port infrastructure, cargo facilities and warehouses reportedly hit, while late yesterday Ukrainian drone strikes knocked out Russia’s Novoshakhtinsk Refinery.
Wheat is now testing an important support area in its current uptrend. Breaking that support could weaken the technical picture, which is an end-user dream, but the market may first need greater confidence that the threat to Black Sea grain movement is actually easing. For now, diplomatic hopes are increasing, but the attacks continue.
Widespread weekend rains are forecast for much of the Western Corn Belt. While delays will be minimal, as it’s early in the season, buyers needing new-crop bushels are scrambling to extend coverage. Quick-ship bids are now being posted, mainly at soy crushers. Meanwhile, ethanol margins improved to $0.40 in some locations. The most disturbing thing remains the cost of diesel, and all the tweeting and talking has seen futures retreat $0.50 this week, but nothing in the cash market like you would typically see in grains. November diesel fuel has been holding near 4.50 the last few sessions, which is just above trendline and moving-average support. Closing $0.20 lower implies something deeper in a price break is in the works.
Iran wants to talk a deal but wants it to be based off of the June Islamabad MOU treaty. Pres. Trump is rejecting their proposals because, again, as always, the Iranian talk is without a discussion on their nuclear ambitions.
Next Wednesday, we get our September 1 Stocks and Final 2026 Small Grains Report. There is a brewing discussion that the USDA last year overestimated both corn and soybean crops, and this could show up in next week’s data. Corn gets a new bullish import kick if old-crop stocks are put at 1.9 Bil Bu, quickly sending our new crop into the 1.4 Bil Bu range. Also, a lower old-crop soybean stocks number would help answer why crushers are scrambling when they can’t get access to new crop due to rainy weather.
The grain trade has rolled into the end-of-the-month flush as we also come to the end of the quarter as well. Unless we get a surprising fact sheet from the US after the close, similar to May, stability should arrive in the grain trade into Monday, as corn wants to give the image it will plug its gap (509 December) from the Pro Farmer Tour, with wheat following its lead, while soybeans decide if November is going to close Friday below 1300.
Cattle Overview
Yesterday’s cattle trade stalled, with December cattle tagging its downtrend line resistance we showed in yesterday’s video, with the retreat still looking marginal on the charts. Strength in the cattle market since last Friday’s friendly Cattle on Feed report is still prevalent.
September feeder cattle went off the board yesterday, picking up over a dollar at $337.62. This is down $28 from last year. October now looks a little lean with its $5 discount to the cash index when typically, this time of the year, they’d be mostly even. Obviously, it’s the fear of new Mexican feeder cattle coming in, which frankly are badly wanted, as last week’s cattle report has some wondering if heifer retention is tightening up supply presently.
Negotiated trade remains quiet, and of course the North has been seeing dressed bids at $350. But boxed beef prices do continue to slip, as yesterday Choice was off $1.19 at $376.12, while Select slipped $0.24 at $352.10. There was solid movement of 116 loads, 79 Choice, 14 Select, with 18 ground beef and the rest trim.
If we can get cash cattle trade steady money in the South near 225, the market would signal that the early fall cash low occurred ahead of the equinox, and that any weakness that were to occur in early October would be confined to above the 220-price range. Even with Mexican feeder cattle now picking up in number, feedlots putting in corn silage and corn want any animal available, and it seems like the good old days, they are pressing their bids to get them.
The friendly news this morning is that the Hogs and Pigs report was seen as bullish, with all hogs down 2%, kept for breeding off 1%, while kept for marketing was down 2%. Even all the weight categories were 2% lower than a year ago.
In today’s potential wild and woolly trade, December cattle have defined support at 219, with resistance at yesterday’s trendline number of 223. Once that is breached, it’s on to major moving-average resistance near 224.50-225.
November feeder cattle have support at 324.50, with major support at 322.00. On the upside, if they find new gains with the weaker corn market, last week’s highs of 333 will be what they want to test. Ultimately, continuation resistance at the September highs of 338, and then major moving-average resistance that will likely stall out any optimism if seen, is in that 340-343 range, on a surprise note if Pres. Trump decides to limit some of these tariff-free beef trimmings.