Grain and livestock futures were lower Wednesday, except for feeder cattle.
Grains See Pre-WASDE Profit Taking
Grains closed lower across the complex with risk off, technical selling and fund profit taking heading into the September WASDE.
Vince Boddicker with Farmers Trading Company says the market disregarded flash export sales of 7.2 million bu. of corn to Mexico, 12.5 million bu. of soybeans to China and 3.6 million bu. of soybeans to unknown destinations for the 2026-27 marketing year.
Instead fund traders took some profits after a sizable rally staged in August and early September.
Some farmers were also putting some options protection in place to protect those profits ahead of what could be a volatile WASDE report on Friday.
“We did see several people come in and put some put options on beans and corn today just in case and that’s maybe what you’re seeing across the board and adding to some of that negativity,” he explains.
Yield Estimates Spook the Market
The average trade guess for corn yield came in at 178.2 bu. per acre, and StoneX came in at 182.9 bu. per acre, which both seemed bearish relative to what the trade was already pricing in for yield.
Boddicker says, “It feels, that maybe that 177 is a closer number to what we’ve been trading. I think the trade is well aware that Pro Farmers usually comes in substantially less than what USDA dad been projecting earlier most years. So, you’ve got to go somewhere in between and find that happy medium.”
The lower yields may not show up in the WASDE, so ee says the real key for yield will be harvest results. “Because with that dry finish it may have taken more off than the trade believes.”
That may take October before the market sees that.
Grains Hold Last Week’s Lows
Technically the grain markets tested last week’s lows but bounced off those levels, which is positive according to Boddicker.
So, he thinks the funds are going to continue to defend the record long position they have in the grain market for this time of year, but especially in corn.
“You would think they would. But again, you look at it and corn is about 23 cents off of that high. If you’re going to get a decent correction and maybe have some sideways trade, could you go as much as 28 to 32 off of that? You could. So you could take a bit more. I don’t want to see the market put in lower lows but if we do and then we pop right back out of there, maybe it’s not a big deal,” he adds.
Soybean Estimates Nearly Flat
The average trade guess for soybean yield is 52.5 bu. per acre, down just .2 bu. from August. StoneX put national soybean yield at 53 bu. which is stead with last month. The trade isn’t expecting much change in the September WASDE for soybeans because it is too early according to Boddicker.
“You know we all know how we finish is mportant and we’ve had some dry ones there. A few areas have gotten rain. So I really doubt USDA is going to pull a lot off of the beans, at least until October. And by the time we get there, we should have lots of beans out and have a pretty good idea where it’s at,” he adds.
Northwest Corn Belt Hot and Dry
Still it is hard to know how the areas that got ample moisture will be offset by the areas that didn’t and had a pretty poor finish like in the Northwestern Corn Belt.
“There’s no doubt. And we’ve had some pretty good rains in our area this last week, but again, so spotty on where it’s at,” says the Mitchell, South Dakota market analyst who has farmers in the area that have been in the bulls eye of the drought.
Demand Underpinning the Grain Markets
Private exporters reported some big export flash sales on Wednesday morning including 7.2 billion bu. of corn to Mexico, 12.5 million bu. of soybeans sold to China and another 3.6 million bu. to unknown destinations.
China has been a steady buyer of U.S. soybeans and pullbacks seems to be well supported by demand.
“One would think if China’s been buying as much as they have, they will continue to do that. You know, it reminds you more of a normal year in the bean sales ahead of harvest versus what we saw last year. And I think that puts everybody’s mind a little bit more at ease that they should stay there,” he concludes.
Wheat Chases Black Sea Headlines
Wheat was higher overnight as Ukraine staged drone attacks on the Russia port of Nova. However, by the time the day session started another headline hit the market that Moscow said U.S. diplomatic talks would resume and selling also took hold.
Why does the market keeps trading these headlines?
Boddicker says, “I think the real answer is the algorithm traders that are out there trading headlines and news stories and they’re 85 to 95 percent of the trade out there so they can have huge influence.”
How long does that market keep trading that story before it becomes tired of it?
“You would think you would have been tired of it already,” he replies, “But again, if it’s a slow news day, they’re going to jump on. If there’s other things that are more important, they probably ignore it.”
Black Sea Exports Threatened
So he thinks the market continues to keep premium intact with the loss of exports out of the Black Sea region as the different export facilities continue to be damaged.
“I think there was a news story out this morning, again, talking about downgrading the Russian exports for this coming year. That’s not going to go away anytime soon. I think those ports damage are going to take a long time to fix,” he states.
But both countries may find ways to take grain across land and avert some of the fighting.
Money Flow and Outside Markets
The outside markets and money flow also impacted the ag market action with the equities lower and crude oil back up near three month highs.
“One has to believe that five six, seven months ago when the stock market started to come back you saw some traders come out of the commodities and go back into the stocks. They’re probably a little skinny but I don’t think they’re going to make any big exits from that market longer term but short term they may have a few of them taking profit,” he explains.
Live Cattle Consolidate
Feeder cattle ended higher with the pull back in corn but live cattle futures saw light consolidation after a big rally on Tuesday.
The outside market negatively may have also played a role.
However, Boddicker says the market needs to build some confidence before it makes any big moves.
“And I think they’re doing that. For so long, every Friday it was putting in a lower low, and we’ve had a couple Fridays now where we haven’t done that. So, I think it shows a little positive attitude there,” he states.
The feeder cattle market is holding as cash trade in the sale barns is holding up better than the fed cash trade. Corn was also lower but Boddicker thinks its a non-factor until cash corn moves over $5.
Cattle Bottoming?
He thinks the futures may also be bottoming with the idea the cash trade has also bottomed and there is hope for higher cash this week.
He says, “Last week, you were probably steady to a little higher, depending on who you looked at and who you listened to. But I think we’re working that way. I’m not sure it’s going to be a runaway. It’s going to be a slow process coming out of here.”
Boddicker does some historical analysis and last week it showed there are years where the market is held down until November before it recovers.
“Hopefully, we’re not going to do that. That’s a couple months out yet. But even if we don’t put new lows in and we’re sideways I think we will be building confidence for down the road,” he adds.
However, he doesn’t think the funds will come back in to buy the cattle futures like they did in the past due to the headline risk tied to Trump administration policies.
“They think the easy money’s gone,” he concludes.
Hogs Struggle at Resistance
Lean hog futures also consolidated after a higher day Tuesday and hit the next layer of chart resistance.
“Last week you had the breakout early in the week and now the last four or five days the market is forming another sideways pattern which isn’t all bad for hogs this time of year,” he explains.
Seasonally, October is a time when the hog market can bottom but it just needs some news to help provide a catalyst to rally.
“We haven’t heard a lot about disease problems and numbers lately and maybe that’s what we need to get the next move higher,” he states.
Canada Trade War Flares
The ag markets may also be seeing some bearishness from the escalation of the U.S. Canada trade war with the U.S. banning a list of ag and other products from Canada and increasing tariffs on other.
“When you look at Canada being our second biggest trade partner, it would sure be great if we can get things figured out to trade as normal, so to speak. But I think under the current environment, I’m not sure you’re going to be able to get that done, but hopefully they can come to some compromise,” he concludes.
