Grains ended mostly higher on Tuesday, while livestock were up with the exception of live cattle.
Soybeans Price in Negative Argentina Export News
Soybean futures clawed their way back to close slightly higher after making fresh for the move lows.
The country announced on Monday they were suspending export taxes until Oct. 31, sending soybeans, meal and bean oil sharply lower.
That was followed by word Tuesday that China had bought up to 10 cargoes of Argentina soybeans due to their lower prices, another strike against U.S. farmers.
Brian Grete, senior analyst with CommStock Investments says the soybean market has priced in all of the negative export news out of Argentina.
“Well, I think Monday’s big price drop and then the recovery on Tuesday would suggest that it is in the marketplace for now. And probably not too much of a surprise. We saw the Argentine farmer be very aggressive on the sell side of things as expected. We saw China move into the Argentine market and actively book cargoes for that November /December time frame, so late fall maybe into early winter time frame and probably also not too surprising,” he explains.
China Hangover Still Being Felt
The soybean market has also priced in the disappointment of not being included in the U.S. China discussions and is now looking ahead trying to determine when or if China will be back in the export market for U.S. soybeans.
Grete says right now China has enough inventory to bridge the gap until Brazil’s next crop start being harvested after the first of the new year.
“They had aggressively booked Brazilian cargoes through the November time frame. Now they come in and get Argentina to clean up the rest of the end of the year. And I think that they’re sitting pretty well,” he says.
And even with a trade deal in late October when the two leaders meet in Korea it may provide a very narrow window for soybean sales.
“Probably the most likely scenario is if we get some sort of comprehensive trade deal done, it doesn’t sound like anything on that front will happen until sometime in 2026 and then the comprehensive deal would have to also include some sort of mandate in terms of what China buys for U.S. soybeans because once we flip the calendar to 2026 we are at the very end of our prime shipping season for us soybeans and so at that point in time China’s attention along with the rest of the world would start to turn to Brazilian new crop supplies,” he explains.
He thinks the only thing that could spook the Chinese buyer a little bit is if Brazil has some sort of an issue with weather for their new crop growing season.
How Much Lower Are Soybean Yields?
Grete says soybean yields are likely dropping due to the poor finish to the soybean crop.
“I think, from where they were estimated in October, and we’ll see how much that drops. If you drop it a couple bushels, maybe you start to get tight enough. But the export side of things, you’re going to have to take some off of there as well. And so, honestly, they might offset each other and not have too much of a price impact.
Will Soybeans Hold $10?
So will soybeans be able to hold $10 support on the charts?
Grete says for now the selling has been exhausted at least for now.
“It doesn’t seem like the funds wanna press it below $10 at the moment,” he explains.
Corn Futures Bounce
Corn futures held the 20-day moving average and saw a corrective or short covering bounce into the close.
“I think the bounce was technically based but I really do like the performance of the corn market here, with everything that’s been thrown at it,” he says.
Grete says if soybeans and wheat can stop going down that will help the corn market stage a short term rally.
“Boy, you get up into that $4.40 level to $4.70 in December corn, and there’s a lot of resistance in there,” he says.
Corn Yield Sliding Below 2024?
Grete says yield reports on corn have been under a year ago and so he is expecting national yield to fall further than the 2 bu. USDA trimmed off in September but it may take a while to get there.
“If you look back historically, not a lot of change from September to October, and then sometimes not much change from October to November. So, you know, harvestable data will be moved into in place of the implied ear weights. I think that that, you know, will eventually pull us down,” he explains.
Grete does not think final yield falls below the 179.3 bu. per acre average from 2024.
“In 2020, the derecho year, from August until final, USDA took 9 .8 bushels off of the yield. That was pretty much a disaster across Iowa into parts of Illinois and even into Indiana,” he says.
Wheat Futures Bounce Off Contract Lows
Wheat futures also saw short covering and were oversold after hitting contract lows in all three exchanges on Monday.
Whether or not the market can build on it is in question according to Grete. He says demand has been strong and even at these prices the U.S. is not competitive.
“The focus remains on Russia and the global supply there. So their crop continues to get a little bit bigger and what we’re
seeing now is the Russian exporter is out lowering prices, trying to drum up demand,” he adds.
Live Cattle Correct, Feeders Fly
After the big rally on Monday live cattle futures consolidated, while feeders continued to push higher.
Grete thinks live cattle ran into chart resistance and saw some light profit taking but the market is also waiting for cash trade for direction.
Feeders continue to build premium with the New World Screwworm news propping up especially the deferred contracts on ideas the border will stay closed longer to Mexican feeder cattle imports.
Will Cattle Retest the Highs?
Grete says history would say no.
“If we do have another run to a high, eventually you’re going to put in your all -time high pullback and you’ll never quite get back there on the retest. Now, I don’t know if we have fallen far enough on the most recent pullback to make that true or not, but I would say that If an all -time high isn’t in place now, the next push to the upside will probably be that level.”
Lean Hog Futures Make Contract Highs
Lean hog futures scored more new contract highs with fund buying continue to push the market.
Grete says thinks the Hogs and Pigs Report on Thursday will have a big impact on whether the rally continues or not.
“I think will be critical to see how much USDA has to revise those past numbers because quite honestly the summer slaughter just didn’t live up to expectations what was implied from last spring,” he says.
