Overnight grain optimism fades from the typical 4:00 A.M. high.
Grain Overview
The overnight grain trade opened higher, with wheat at one point gaining $0.30 in the overnight session on word that no Black Sea grains were moving this week. But as typical, by 4:00 a.m. CT when the MATIF opens, the selling vigilantes arrive to relax grain price advances.
Witkoff and Kushner spent the weekend meeting separately with Putin and Zelenskiy, but the talks produced no breakthrough. The two sides remain far apart, particularly over the remaining Ukrainian-held territory in the Donbas.
There was at least some movement. Zelenskiy said the U.S. presented several new ideas that he considered worthwhile, with another meeting involving Ukraine, the U.S. and Europe now being planned. Importantly for the grain markets, Zelenskiy said grain shipments and energy infrastructure are expected to be part of those discussions. It’s on this hope that the grain trade gave up sharp overnight gains.
Despite hopes for renewed talks on grain movement, Russian Foreign Minister Lavrov continues to throw cold water on the idea. He said today that reviving a Black Sea shipping arrangement is unacceptable and unrealistic under current conditions, while again pointing to Ukrainian attacks on Russian civilian infrastructure, including oil refineries. For now, diplomacy may be restarting, which is what the grain trade is relying on, but Russia and Ukraine remain a long way from an agreement that would improve Black Sea grain movement.
We start to see more estimates released ahead of Friday’s scheduled WASDE report release. Early predictions are calling for a decline in corn and steady soybean production numbers, but what the trade will be most interested in is ending stocks. Even with steady production, demand is already forecast to be larger than crop sizes. StoneX is expected to release their typical high watermark estimate today, but the trade is watching how much they lower estimates from their desk compared to the August number, which was still above 184 BPA.
A bearish influence toward row crops is that we are at elevated prices with harvest starting to get underway, which always brings the feast before the famine. Also, planting is getting underway in Brazil. In Mato Grosso, Brazil’s largest soybean-producing state, its sanitary planting restriction just ended, so planting is now permitted. However, most dryland producers are not expected to rush into the fields. Famato and IMEA are advising growers to wait for more dependable rainfall and adequate soil moisture rather than planting into marginal conditions and risking replanting.
Some irrigated acres in Mato Grosso will start immediately, particularly fields where producers want an early soybean harvest followed by second-crop cotton. But for the huge dryland acreage, the return of regular rains during the second half of September is going to determine how quickly planting accelerates.
Important markers for today are for December corn to hold 539 on the close to maintain upward momentum. This goes for soybeans staying above 1300, while the wheat trade needs to put in a higher close above the overnight openings of 746.4 on Chicago Dec wheat and 817 for KC wheat to maintain recovery price interest.
Cattle Overview
This morning’s cattle trade looks steady/mixed as Pres. Trump’s signing of an executive order to essentially have the USDA look into adopting some form of Country-of-Origin labeling is, for now, largely optics for the cattle market. The order requires USDA to review its authority and report back within 90 days, rather than immediately changing labeling requirements. What ultimately becomes of the review remains to be seen.
The cash trade continued its softening move last week, while the board went the opposite way, reflecting optimism that the 209-210 range may be the low watermark for October cattle. That level may get revisited as the packers work on fulfilling Pres. Trump’s push for lower beef prices ahead of the elections.
The Douglas, Arizona port of entry is scheduled to resume Mexican feeder cattle imports today following repairs to its inspection facilities. The port had been temporarily shut after damage to the USDA inspection chute, interrupting what was already a limited flow of cattle out of Mexico.
More important for the cattle trade is what happens next. USDA currently lists the opening of Santa Teresa, New Mexico as “to be determined,” rather than confirming the September 24 date that had been talked about. Columbus, New Mexico is also listed as “to be determined.”
USDA has said the phased reopening schedule remains flexible and can be adjusted or paused depending on how inspections go at Douglas and the NWS situation in Mexico. With Douglas losing several days of activity, USDA now has less operating history to judge before moving on to the much larger Santa Teresa crossing.
For now, Douglas is expected to restart today, but the bigger flow of Mexican feeder cattle that the market has been anticipating through Santa Teresa does not have a firm opening date. That adds a little friendly uncertainty back into the feeder cattle market.
The chart numbers have December cattle with strong support in the 211-212 range, with resistance at 217.50-219. This leaves December cattle, for now, in a pinball trading range. Meanwhile, October feeder cattle have their support at 310-312, with resistance at 325.50-326 and then major resistance at 329-330.