Grain and livestock futures were mostly lower on Friday except nearby live cattle.
Grains See Risk Off Selling Pre-China Summit
The grain and oilseed markets were all lower on Friday with Dec corn down 3 cents at $5.27 1/2, Nov soybeans fell 16 1/4 to $13.03 1/2, Dec meal lost $12.70, Dec bean oil dropped 93 points, with Dec SRW wheat down 12 3/4, Dec HRW wheat fell 10 3/4 and Dec HRS wheat lost 11 1/4.
Naomi Blohm with Total Farm Marketing says the grain markets saw risk off selling by traders heading into the weekend as U.S. Treasury Secretary Scott Bessent was schedule to meet with his Chinese counterpart to lay the groundwork for the U.S. China Summit between President Trump and President Xi on Sept. 24.
“Traders, of course, looking and hoping to see if China is going to be buying any additional purchases of American soybeans. But also, are they going to be stepping up to the plate and buying corn or sorghum, wheat, maybe even some of dairy products? So without any fresh news, we definitely saw profit taking,” she explains.
Blohm says funds may be slowly moving to the sidelines after a strong quarter.
“So remember, third quarter is going to be wrapping up here in just a few business days. So we’re going to maybe see the funds taking profits on more of the long positions that they’ve had if we don’t get friendly news out of this summit between the United States and China.”
China Deliverables
So what do the bulls need to see out of the U.S. China Summit for agricultural deliverables to not see a selloff?
Blohm says the market needs to see some evidence of some of the $17 billion in agricultural purchases that China has said they would buy and getting them to drop the 10% reciprocal tariffs on U.S. grain and oilseeds is also important.
“So we’ll be watching wording this weekend from Bessent and his Chinese counterpart to see if we can have any forward motion, forward progress before President Trump’s meeting with Xi. So there’s a lot of hurdles still in the way for China to commit to further ag products,” she says.
Additionally, Blohm think the soybean purchases China has made are a good sign.
“They are approximately half purchased of the 25 million metric tons of soybeans they said they would buy. So they can come into the meeting and say, hey, we’ve started. We are making progress. We are showing good faith. But now they’re going to want to see maybe the United States do something on our end to show a little bit more of a goodwill gesture in return. There’s a lot at stake,” she mentions.
Details Matter
She points out that the lack of details in the last couple of meetings has sent grain and especially soybean, prices lower.
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“A lack of news makes traders even a little bit more nervous, she says, “And that could send traders just heading for the door even more. It could lead to technical selling next week if we don’t get any friendly headlines in the short term. So just be a little bit cautious. Of course, we’re all optimistic that we can get some great trades happening. But if it doesn’t, again, we could see some technical selling that would begin on Sunday night, Monday and last into next week.”
Harvest Pressure
Blohm says the grain markets also saw some hedge pressure heading into a weekend where at least a portion of the Corn Belt will be able to harvest.
“I think there’s a little bit of that happening. Last week’s weekly crop progress rating said that we’re pretty much on target for our five year average for corn harvest,” she says.
However, that could show some delays next week with the soggy weekend for a good portion of the Midwest.
Once the rain is out of the way it looks like there will be an open window for harvesting.
“They’re going to be out there running as hard as they can to get this harvest wrapped up, especially when in some places basis levels remain attractive and we’ll want to get some advantage of that as harvest gets underway,” Blohm adds.
Soybean Meal Rally
While soybean meal saw some profit taking on Friday the market was on fire and made new contract highs on Thursday as the harvest delays tied to wet weather has left some processors unable to source soybeans.
Blohm says, “I do think some of that supply is slowly coming. And I know I had one client in Illinois who was racing to get some beans harvest just to take advantage of that exact situation, wanting to take advantage of the strong basis. So it may not be a huge amount, but it was enough where they got just enough beans to come into some of those processing facilities. That may have been part of the reason why we saw soybean meal set back.”
Although she says it could have just been some profit taking after such a big rally and meal still ended $5.80 for the week.
Corn and Soybean Technicals
Corn futures were lower for a second week and Dec corn closed below the 20-day moving average.
“So what we’re watching on that Dec corn, we had support near the $529, $530 area, but then we slipped below that. And so now that’s going to be resistance and it’s going to be in the form of the five day, the 10 day, the 20 day moving average ahead, a hard ceiling to get
through now in the short term,” she says.
The next support on Dec corn is near $5.25. If that fails, Blohm says there’s a gap on the daily chart at $5.09 that the market might try to take out. She says a 50% correction of the August rally would take Dec corn prices back down to $5.
“If we got that low, boy, I think there would be plenty of buyers waiting there to step up to the plate. As we all know, the grain story overall is supportive. But we’re just in that time of year where if we don’t get fresh, friendly news, prices have a tendency to drift lower. That, along with harvest pressure, might be something that affects corn and soybeans,” she says.
For soybeans she is watching $13 on the Nov contract. If that fails, tit projects down to $12.50.
Wheat Falls With Higher Dollar, Black Sea War Fatigue
Wheat was also lower on risk off selling plus the headlines continue to indicate efforts to resurface a Grain Corridor but fighting continues.
Blohm says, “But there is some grain that is able to be moved. Of course, with the amount of fighting that’s happened there and the amount of ports that have had infrastructure damage, it’s going to be a long time before they can be back to a normal export pace. But we do have Russia and Ukraine able to get product out, a little bit of product.”
Exports are behind normal says Blohm, but the end users are not panicking yet.
“And so we even see that from the standpoint of weekly export sales in the United States, our weekly export sales this week were just modest within the trading range. And so no one seems to be excited that they’re not going to be able to get the wheat. But it is something to be watching. The wheat value now we are over, I think, nearly like a dollar off the highs and getting down to some major support areas. Of course, not helping wheat and exports right now is the value of that U.S. dollar that continues to inch higher. So that is not helpful for our export situation either,” she adds.
Winter Wheat Acres to Rise
The wheat market also seems to be pricing in more winter wheat acres.
“It is pressuring the market. And if you look at the radar over the last couple of days and into the weekend, some of the Southern Plains are expected to receive rain in some of those drought portions. So that’ll be welcomed rain as they are planting the winter wheat down there,” she says.
On top of that Blohm says in Australia, their crop is improving. “So we’re able to take a little bit of a short term breath on the fear of not. having the wheat. But that, of course, is a headline story that can change any day.”
Cattle Market Falls on Border Fear
The cattle market was mostly lower on Friday except nearby live cattle futures and posted lower weekly closes in live and feeder cattle futures. Blohm says part of it was an overreaction to the news to the second port opening, on Sept. 24 of Santa Teresa, which is the largest port.
“It felt like the cattle market and the feeder cattle market just did a healthy correction from the rally that we had had a couple weeks ago. Market moving lower, of course, on more border crossings becoming available. There’s relief potentially in sight that we might be able to alleviate some of our tight supplies here in the United States. We don’t have any specific fresh news to justify a rally,” she says.
However, she also points out that regardless of the headlines the supply story continues to overall to be supportive. “So it would take some sort of a dramatic influx of bearish news to see the market just completely fall apart lower from where we are right now in the short term,” she says.
Beef Demand
She is also watching consumer beef demand to see if it is hurt by record highs on diesel prices.
More Contract Lows in Hogs
Lean hog futures saw contract lows again on Friday and October was down $3.42 for the week. She says the market is still searching for a low and getting no help from a lower cash market.
“You know, earlier this week on Wednesday, I thought maybe the market had found a low. It tried to put in a little hook reversal higher, just
couldn’t do it. So we don’t have any friendly news for the hog complex right now. We have production levels that are actually slightly higher than a year ago. Exports are in line with year ago levels and just ideas that. There’s just nothing friendly out there to talk about,” she explains.
Blohm thinks the technical selling could spill into next week and the hogs will also be watching the outcome of the China meeting.
Milk Market Under $16
The Class III milk futures were also under pressure seeing some deferred contracts dipping under $16. Blohm says the market is still just seeing too much production.
“The milk market cannot find any friendly news. It’s just focused on ample production. We saw lower values this week for some of the dairy
products. And so that weighed on prices as well.”
She says prices are becoming extremely oversold and it might be a value point here for buyers to step in. She adds, “I’m a little hopeful that we see some good news from China, maybe wanting to buy some of our dairy products. So we’ll be watching for that next week between President Trump and President Xi. But again, the theme continues to be ample milk production. There’s going to be a milk production
report coming up. So we’ll see if that theme continues or if anything has shifted,” she concludes.
