Grains ended mixed Monday with livestock futures higher.
Corn Makes New Contract Highs
Corn futures made new contract highs and closed1 1/4 higher on Monday.
Brian Grete with Commstock Investments says corn was resilient, shaking off early month end profit taking and the lower wheat futures.
“It was pretty impressive. It was end of month so there was every reason to take some profits out of long positions. And we saw a little bit of that, but buyers were underneath the market. So that would indicate that we probably will see a little bit bigger push to the upside in the corn market as we move forward,” he says.
The true test will be if corn can hold gains at the start of a new month as August was dominated by fund buying not just in corn but the entire grain complex he says.
Funds Near Record Long in Corn
The funds are estimated to be near to record long in the corn market as the CFTC Commitment of Traders Report lags. It had shown the funds were long futures and options nearly 377,000 contracts but that number lags and is likely closer to the record long of 450,000. So will funds keep buying?
Grete says, “Just based on their price performance and and activity in August it would suggest that yeah they still do want to chase it to the upside but man they are really extended long right now. You know record gross position length so that only accounts for the long positions net record all-time high for the net position as of the end of August and and I don’t know, close to an all-time high in the net long position overall. And so they are really extended.”
He thinks the fund money is likely to flow into some of the other markets more aggressively but he’s not ruling out the funds chasing the corn market.
“History tells us that December corn futures rarely top in August, and they have never topped in the past 21 years in September or October. So there may be another wave of fund buying coming down the road,” he says.
How High Could Corn Prices Rally?
So how high could corn prices rally? Over $6, $7?
“I’m not on the crazy high side of things, to be honest with you, because that’s going to take a lot of factors to come in play. We still don’t know on the South American growing season for 2026-27. Obviously, that crop hasn’t even begun to be planted yet. And so that’ll be a key one as we move forward,” he says.
The market is also trying to figure out the size of the U.S. crop. “There’s a wide range of estimates out there. not only on yield, but also on production. And so we’ll figure all that out as we move forward through harvest season here. But that could put a little bit of a damper on the market, I think, just with some of that seasonal selling pressure as we move through September and October,” says Grete.
Fresh Bullish Catalyst for Corn
So the corn market will need a new bullish story to continue to rally and that includes a bullish September WASDE.
“Bull markets like to be fed on a regular basis. And so they are going to need to continue to see bullish headlines, bullish data, that type of thing to encourage that the funds to continue to extend their length,” he says.
Wheat Sees Profit Taking on Black Sea Headlines
The wheat market set back on end of month profit taking after rallying nearly $2 off the lows.
The market was also caught up in Black Sea headlines. Turkey’s leader is schedule to meet with Russian President Putin and wants to meet with Ukrainian officials to put a plan in place to get Black Sea grain movement flowing again.
“We know that Turkey was the leader on that back in 2022, and we eventually got the grain initiative but it took months of negotiating back and forth and so this isn’t probably an overnight fix to be honest with you,” he states.
Yet Grete is mindful that the wheat market is more headline responsive than the others at the moment.
“And so when they see a bullish headline they respond in bullish way and when they see a bearish headline or a potentially bearish headline
they respond in the same manner in that regard. And so I think that more than anything, it probably just gave traders a reason to take some money out of the long side of the market to end August,” he adds.
The CFTC data was as of August 25th and it showed they were short SRW wheat but long HRW and spring wheat.
“And so when you account for those last three trading days of last week, I think that they probably did cover all their shorts there and maybe even went a little bit long in the SRW wheat. So historically they just don’t want to build a long position in that market they have had years upon year of just being that short SRW wheat so we shall see,” he says.
Soybeans End Flat
Soybeans made new contract highs overnight and then shook off day session pressure to closed mixed as demand continues to underpin the market.
Private exporters sold another 5.8 billion bu. of soybeans to unknown destinations on Monday morning.
“China’s been a big buyer. Unknown destinations have been a big buyer, both on daily sales and on the weekly sales numbers. Keep in mind that the unknown destinations in all likelihood, most of that, if not all of it, is going to China. And so China is quickly moving toward that 25 million ton. goal or target that it has in place via the trade deal. So we shall see on that front. But it looks like all things are chugging ahead in a pretty
rapid manner in that regard.”
He also expects buying ahead of the meeting between President Trump and Xi Jinping scheduled for September 24th coming up.
Crush has also been record large for 2025-26 he adds.
Soybean Crop Finish
The soybean crop is also finishing with some variable conditions according to Grete but with ample moisture and the almost ideal number of pods out there.
“So we had plentiful soil moisture. We’re getting some more rains here, more pockets of rains and widespread, but we are getting that. But then you counter that with the fact that there is disease pressure out there. It is hot and dry in some of the areas. And so, I don’t know, maybe it all
evens itself out and you get just an average finish,” he says.
Still he points out that double crop soybeans can finish well with late season moisture.
“But on the supply side, it’s really hard to peg what the yield is and production is at the end of August, even as you roll into September. So there’s a lot of variables at play there on the supply side,” he remarks.
Higher Monthly Closes for Grains
The grain markets all posted higher monthly closes which is unusual for August.
However, the funds poured money into the grain and soy markets and even the softs this month.
“When you include other crops in there boy it’s just been a big push into those long positions through August and I you know it speaks to money flow one but we have El Nino out there, the super El Nino that’s building and the extreme weather that’s caused not only here in the U.S. but other areas around the world other major producing areas around the world and so that’s a major story.”
Then throw the geopolitics on top of it primarily in the Black Sea region for the grain and soy markets, but also in the Middle East to a lesser degree. “You’ve got a lot of factors that are all coming into play at once, and these are all highly volatile factors, and they seem to encourage the fund buying to just flow into the grain and soy and other crops,” he says.
So there could be more upside left in the grains but it will be accompanies with more volatility.
Cattle See Short Covering Bounce
Cattle futures saw the exact opposite in August and what was fund money flowing out of the market. Live and feeder cattle did see a slight bounce on end of month short covering.
Although he thinks the market is trying to carve out a bottom.
“Well, I think the downside is overdone, to be honest with you. We need some fundamental support, though, to back that up. And so we need to see the cash market strengthen. We haven’t seen that yet. We need to see the product market strengthen. We saw a little bit of that in mid-August, but that quickly faded as soon as the Labor Day buying was done. I think that we need some fundamental support underneath the market to really encourage sustained buying in the futures, and we just haven’t seen that yet,” he explains.
So he thinks the market can reset in a new month but admits it may be a slow grind.
Cash Needs to Bottom
The biggest keys to bottoming the cattle market will be getting past the negative headlines, including the Trump administration’s plan to lower beef.
Grete says more importantly the cash market needs to also put in a low.
“I think, we got some panic selling on the side of feedlots. Some of those cattle that were hedged were sold at lower prices. And so, yeah, we do need to turn the cash market.”
Hogs Extend Gains
The hog market also extended gains for a second day on end of month short covering but also building on Friday’s bullish key reversal.
The funds are short over 31,000 contracts and were taking some profits.
Short-term Grete thinks the market is oversold and with the discount to the cash index it needs a correction. However, the trader has been content to let the spread remain wide and allow the index to fall to the futures.
He says, “The index is declining, but it’s declining at a rather modest pace, I guess. Nothing huge on a daily basis. But so maybe they’ve changed their attitude a little bit in here deciding to buy.”
Seasonally he says it is not the right time to rally lean hogs but the market saw contraseasonal price pressure from March into June.
“When you typically would be making your high we made our low and then we bounced a little bit. So who knows from a seasonal standpoint other than history tells us that now is not the time to rally in the hog market,” he says.
