The overnight grain trade was set for higher start, but that was cooled right before the opening with just a steady start, as revelations of what was actually occurring with China revealed. Reuters reported that China is set to cut tariffs on a broad range of US agricultural goods, from corn and wheat to meat and dairy, but top import item soybeans were excluded from a tariff-reduction list jointly issued by China’s Commerce Ministry and the White House. The list covers corn, wheat, sorghum, meat, dairy, vegetable oils and meals. More than 90% of the covered products will be exempt from all additional tariffs imposed on each other and will instead be subject to most-favored-nation tariff rates.

US soybeans still face the additional tariff of 10%, which traders have warned is too high for private crushers to absorb, even as Chinese state buyers have stepped up purchases. The tariff cuts on other goods will reportedly help China meet the $17 billion commitment, and now the trade awaits some trade confirmations. This put beans under heavy pressure overnight.

Persistent rains have created a real squeeze in the nearby soybean market as harvest delays leave crushers scrambling for supplies. Bunge in Iowa was reportedly bidding premiums near 85 cents over November futures for immediate delivery, while Cargill Sioux City has reached as high as $1.00 over, pushing cash beans to roughly $14.17½.

The problem is simple: old-crop supplies are running thin while new-crop beans remain stuck in wet fields. Spoilage and sprouting are highly possible. Some crushers are reportedly slowing operations because they cannot secure enough beans, while Cargill plants in Iowa have stopped posting some soymeal offers.

With additional rain in the forecast this week, this is becoming more than just a harvest delay. The physical soybean and meal markets are tightening quickly, and cash premiums are beginning to reflect it. This makes the September 30 Stocks Report out this Wednesday at 11:00 a.m. very interesting as to how the USDA rectifies this. Smaller stocks are expected across the board than a year ago. The question in the market is by how much.

Ukraine sent 700 drone strikes against refinery targets into Russia over the weekend, while Russia hit the important Danube River port at Kiliya overnight. Russia is again targeting the Danube port system at the same time Black Sea export capacity is already under considerable pressure. Also complicating Ukraine’s exports is that Poland will not store their grain as it tries to move west via land, and that’s causing export backlogs.

Energy prices are pushing sharply higher again, offering little in the way of support to the grains, as Pres. Trump rejected the deal with Iran to open the SOH. Pres. Trump states, as he consistently does, that Iran wants to make a deal badly. Yet Iran puts up the front again, saying they have no plans to talk with the US. As of this morning, November crude oil recovered half of its losses from last week and is trading above 95.00. Diesel fuel is up $0.20 a gallon overnight on the futures but still $0.40 off its highs after Trump said he is “thinking very seriously” about an export ban, despite earlier White House assurances that one would not be implemented. This overnight strength has helped support soybean oil as the crush spread reversed.

The dollar still remains firm, trading at 100.89, up .18 overnight, with bonds trading at a 30-year high and T-bills at a 19-year high. Even though a firm dollar is not helpful for exports, the dollar last summer was trading over 101.00 while our corn exports remained robust.

Rain forecasts for the central Plains wheat belt are beneficial for the fall planting, so that has Kansas losing out overnight on the spreads and adding to the overall night price weakness. Despite some drier pockets developing in the Midwest currently, rain returns to eastern Nebraska, with Iowa receiving copious amounts and Wisconsin also picking up over 1.00” by Wednesday. Illinois and Indiana look to receive almost an inch in some areas by Friday.

The revelation that soybeans did not get their 10% tariffs removed is putting renewed pressure on beans heavily overnight. This is having a throwing-the-baby-out-with-the-bathwater effect, with corn and wheat being dragged lower in its wake. Overnight trading remains one-sided, with no bid prevalent until we likely get to the day session activity. It’s imperative some significant flash sales occur this morning after last Friday morning’s comments from Pres. Trump that the farmers will be very happy. That’s what helped push the trade higher throughout the session.