Waiting on Facts as Grain Markets Lose Momentum

A lack of official releases or announcements from the ongoing US/China trade talks weighed on prices for the second straight day with prices falling back and having erased almost all of Monday’s sharp knee-jerk reaction gains. Nothing has materially changed about the size of the US crops, potential trade news from the meetings and record demand over the last two days, but the nervousness driven by President Trump’s meetings and speech at the UN have been reflected in the inability of the markets to find additional buyers after Monday’s move. The timing of the official trade announcements will decide if the week finishes on a strong note or a continued apprehensive note.

News and Notes:

• The next week will continue to be a challenge for thew WCB as rains look to persist into early October while the ECB will see a drier pattern with harvest starting in earnest. The delayed harvest is a bullish aspect of support, but it does not compare to what could happen if the US and China agree on some of the ag trade numbers that were rumored last weekend.
• All three new crop corn and bean contracts fell to or below important technical and psychological support in today’s set back with Dec corn falling back under the 20-DMA, Nov beans testing the 20-DMA and Dec ’26 wheat falling back to the 50-DMA just above $7. The Dec wheat chart is on Page 2 and shows these developments but also shows the September 89-cent pullback since the Sep 2nd contract high at $7.95. This highlights the late August rally when bombs were destroying Black Sea infrastructure and then the fear/hope for a cease fire and/or the re-opening of the humanitarian grain corridor. The stakes are extremely high for world prices if the trapped corn and wheat bushels make it back into the world market and caution was exhibited. If wheat falls another 50-60 cents it would negatively impact corn for at least one-third of the loss. It sounds inhumane to say, but peace breaking out in the Black Sea and the Straits of Hormuz would be very bearish factor for all prices.
• November diesel futures fell to their lowest price ($4.49) in 2-weeks and at today’s lows traded roughly 56-cents below last week’s all-time high of $5.05. These types of quick breaks may not show up in the price offerings from your local supplier, but they are important to watch and help you start a conversation with your supplier to set a price target to top off your tanks. Keeping in touch with all of your suppliers in this crazy environment is the best way to stay on top of things and strengthen the relationships. Diesel’s weakness is being driven by Trump considering stopping US diesel exports. Harder to implement than just saying it will happen. Expect considerable volatility to continue.
• After a day of consolidation on Tuesday, cattle prices were sharply higher again to add to Monday’s big gains. Fedder cattle futures have rallied $12 this week while live cattle futures are only up $5. No cash trade has been set for the week, but rising retail prices and the bullish Cattle on Feed report are adding support to a market that needs fundamental factors and not government factors to find fair value.
• The political headlines from meetings and speeches at the annual UN meeting have surprisingly overshadowed the enormous potential of an expanded US/China trade deal could do to the US balance sheet. The most bullish outcome from the trade meeting is a series of agreements that have been rumored this week. If both sides drop or permanently reduce current tariff levels, China buys even a nominal amount of US corn, and a board of trade concept is approved which would provide a new enforcement layer to US/China trade. Being held accountable has always been a problem.

Rumors start and end rallies, but hard facts are needed to start long-term bullish or bearish trends. This week it has all been about rumors and rhetoric and knee-jerk headline related trading rather than hard facts or meaningful progress toward ending either war. Putin just won re-election which means he has no reason to want the war to stop, and Ukraine did got gain any meaningful world backing to cause Putin any fear. The odds are the Black Sea shipping impasse does not end soon. Iran has no reason to concede anything to Trump before the US mid-term elections next month. Not listening to the noise is impossible and requires discipline but staying the course is a necessity in your marketing plan is a must.