Grain Overview
The morning grain trade is mixed, with wheat showing light gains as French milling wheat pushes higher this morning while the damage from the Ukrainian attacks on Russia’s largest deepwater port is assessed. It’s been reported that one of the loaders is severely damaged, while other terminals are being repaired and are anticipated to be back in operation, but at reduced capacity. Insurance rates have skyrocketed on Black Sea-bound ships, keeping exports from the Azov Sea into the Black Sea and out through the Bosporus of Turkey at 35-50% of normal.
Row crop prices had quite the move to the upside yesterday after the USDA’s revelation of lower carryouts despite increased acreage. First off, there is still considerable chatter about the acreage, but for now we will leave it in place. It is the yield factor that is waking up the marketplace. Even though the Midwest enjoyed good growing conditions, the Plains, from North Dakota down to Texas, saw every state have its corn yields reduced substantially, by over 20% on average compared to last year. There is a strong likelihood we could see the September yield slip potentially further.
Grain terminals across the Midwest were gleefully advertising higher offers on corn prices yesterday, seeking movement and obviously not talking about the potential that corn valuations could increase in the coming months. Only that you have another opportunity to capture a new crop corn sale slightly above the 365-day average price that’s been offered over the past year. This obviously brings in a softer session today, especially with some profit-taking on corn ownership that was surprisingly acquired throughout yesterday’s session ahead of the report.
Yesterday’s crop report brought together a large supply of puzzle pieces, and it’s encouraging to see the USDA acknowledging that it has been behind on old crop demand for corn. What they missed in yesterday’s picture was that the European corn crop is down much more than they are reflecting on the world balance sheets. They lowered the European corn crop by less than 4 MMT, while estimates put the losses in the 10-15 MMT range. New crop corn is not going to see substantially lower demand than last year’s strong performance, since corn, for all intents and purposes, is still considered cheap, but will likely a substantial increase in sales into Europe. The USDA has us, as of yesterday’s data, at 300 Mil Bu too low on corn that can be sold, plus reflecting none to China, which could be a new surprise in the next 30 days before Pres. Xi of China comes to the US to meet with Pres. Trump.
I have spent years in this business and have been watching crop reports for almost 40 years. It never ceases to surprise me that the trade watches each report as if that is the final word, without accepting that there is a future of further trimmings that tighten up the balance sheets (meaning higher prices). Grain prices bottomed on June 30; the recent setback is a corrective price mechanism offering opportunities for end users before further price increases start to develop.
Cattle Overview
Yesterday’s cattle trade stumbled right out of the chute and was lower across the board, consistent with the technical nature of the trade stalling out at resistance on Tuesday, making itself vulnerable to selling in the Wednesday session. The feeder index showed a gain of $1.15 and is now at $355.37. August feeder cattle still declined and went to a strong discount again, reflecting back on the August 24 US border opening and Mexico staying on track.
Even though boxed beef prices had Choice showing a gain yesterday of $2.47 and Select up $0.40, live cattle futures softened when the USDA WASDE report showed beef imports being raised by 73 Mil pounds to 6.132 billion pounds. The USDA showed first-quarter 2027 beef production at 6.165 billion pounds, up 17 million pounds from the first quarter of 2026, and projected cattle prices at $245/CWT, which was a reduction of $5 from the last report.
October live cattle drifted to near short-term technical support at 222.00-222.75 (last week’s low and the 62% retracement measured to the July low). Breaching that opens up a drop to 219.00-220.00. September feeders closed under 340 and, without a quick rebound today, remain vulnerable to 333.50-334.00, the 78% retracement number of the July low, which is typically a substantial support number if it needs to be challenged.
Our technical observations on the charts are that the V-bottom created on July 27 is substantial and that we are seeing a volatile 3-wave recovery that should anchor at the lower prices reflected above and see another lift in prices.
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