Grains were mixed early Wednesday, with cattle lower.
Soybeans Retest Highs
Soybeans retested the contract highs overnight and then were consolidating under those levels early Wednesday.
DuWayne Bosse of Bolt Marketing says he was surprised with the rally this week because of the lack of flash sales to China but there have been more rumors of China purchases which have provide support.
Funds have also been buying ahead of the U.S. China Summit scheduled for Sept. 24 with ideas the reciprocal tariffs of 10% will be dropped by China making U.S. beans more competitive for private crushers.
“I hope it’s right that China’s going to drop that 10% tariff they have on our soybeans. That does need to happen if we’re going to get to that 25 million metric ton that the White House has promised that China is going to buy of our soybeans,” he says.
Bosse has China pegged for around 13 metric tons of purchases so far bought by government entities for the reserves.
“For their crushers there domestically to buy our soybeans, we need that tariff-free status so we can compete with South America.”
Soybean Balance Sheets Tight
If China does buy the entire 25 MMT on top of the record crush rate the ending stocks fall below 300 million bu.
“So that’s why the market’s so sensitive. Every time we get an export sales flash or a rumor that they’re dropping the tariff,” he says.
Record Crush for 2025/26
NOPA also released their crush report on Tuesday and while crush was only 205.5 million bu. in August and below expectations, it was still 8.4% above last year.
The August crush coming in lower than expectations was seen as bearish by the trade but bullish to Bosse because it confirmed the market ran out of old crop beans.
“There’s some September bids that are dropping off hard, but November bids are rallying in processing plants. I think what’s happening is they’ve got the beans they’re going to get until harvest and they’re doing their closing for seasonal cleaning or waiting until harvest to get the cheaper beans. So now I view it as we ran out of old crop beans, which is impressive because that stock started out fairly high a year ago and now we’ve dwindled them down to nothing,” he explains.
Soybean Meal Hits New Contract Highs
Soybean meal has also hit new contract and 2 1/2 year highs which has provided some strength to the soybean market.
Bosse says strong meal exports are helping to fuel the rally and there are some spot shortages due to the drought in areas of the Dakotas and Minnesota.
“Spiritwood, North Dakota, one of the new crush plants in east central North Dakota their basis for December, January is even right now,” he says.
Last year basis in that area was $1.50 under the board with China out of the market, so it is a big improvement.
Record Diesel Prices Also Supportive
Record diesel fuel prices above $6 nationally are also helping to support soybeans and bean oil with the push for biofuels.
There is talk though of a ban on U.S. exports of diesel to help improve supplies and lower prices.
Bosse says, “I think there’s a lot more politics involved than than I know and understand but I understand we export around 22, 23 percent of our diesel we generate here.”
With the wars going on, he says the highest prices are overseas, and that is why the U.S. refiners are exporting as much as they are and they are likely the ones that will get hurt without the prices coming down in the U.S.
“So as bad as our price sounds, you know, that they’re still exporting it, that means supply and demand just works. They want them to export. I don’t know if it works or not. Like I said, I think there’s more politics. To me, if you shut it off, that’s a lot more supply we have here and prices should drop hard. But, you know, I don’t know what the crude oil companies are going to say about that, though,” he adds.
Higher Diesel Hits Farmers
These higher diesel prices are coming at the worst time for farmers with harvest ramping up.
Bosse says, “You’re getting the levels now. It’s noticeable on your spreadsheet. When I talk a spreadsheet, I think you got machinery costs, land costs, labor costs, everything all down the line.”
Still as a farmer himself Bosse says it is not as big a line item as others and availability is more of a concern.
“What I’ve kind of pushed lately is just make sure you have it. on farm. You know, have a lot of storage on farm, get it here. Because there’s a couple times this summer, the fuel hub of ours, Aberdeen, South Dakota, was out of diesel fuel. And during the middle of summer, we shouldn’t run out of diesel fuel. So yeah, I like to just have it on hand.”
Corn Struggles With Harvest Pressure, Record Fund Length
The corn market was able to follow the higher soybean market Tuesday but Bosse says rallies may be capped by harvest pressure.
Plus, he says the funds are already near record long in the market over 400,000 contracts and having that kind of length this time of year is very unusual.
That has stopped out the December corn around $5.50 he says, “Because farmers were selling old crops still that they had here in the Northwestern Plains and new crop sales too. So now the funds are record long right as we go into harvest for the next month I think it’s gonna be hard to rally,” he says.
That doesn’t mean its impossible as funds buy grains as a hedge against inflation but he thinks there is going to be a natural seller in the market for the next month because prices are at levels farmers haven’t seen in a couple of years.
“So I could see some profit taking a pullback, a harvest low to like $5.10. I know a lot of people are talking about, so I’m not talking a major like dollar pullback, but it’s gonna be tough for the next month,” he says.
Black Sea Risk Premium
The corn and wheat markets are also tied together and at times try to put in risk premium due to the Black Sea war and export disruptions.
The wheat market is already seeing importers coming to the market that don’t have adequate sources. Algeria was in for a 500,000 metric ton tender of wheat and has to chase the higher price.
“There were some big tenders last couple days, and those tenders were being bought for $30 a ton higher than they were the previous tenders. So it is showing that there’s a supply pinch and prices go higher when they need it,” he says.
The problem is it hasn’t translated into any business for the U.S. yet.
“We haven’t seen our exports increase. But our price has to stay a little bit elevated because we don’t have a huge supply here either. So, you know, if we would drop in price or our currency make a move, then maybe we could pick up exports,” he says.
Bosse points out there is carry in the market and they are using market strategies to capture it heading into spring.
Fed to Raise Rates?
The market is also nervous ahead of the conclusion of the FOMC meeting with a possible 25 point hike on the table.
Bosse says it is being pushed by higher energy prices but he is concerned about what higher interest rates mean for the economy. However, there may be a silver lining for grains.
“The Dow Jones usually pulls back as we raise interest rates. You know, but usually that also means if the stock market goes down, we get more of that investment fund, that fund money coming into these commodities. So that’s why I don’t think the funds are going to exit long
positions in the grains, but it’s just hard to build from record levels. But they might, especially index funds, too,” he describes.
Cattle Correction Continues
The cattle futures were setting back for a second day on profit taking after hitting chart resistance.
“I mean, we’ve had a very nice rally here recently, but the rally just got up to meet where cash was trading at. So I don’t think we had to have a pullback, but markets get overbought and they want to correct it,” he says.
However, it may also be some fear of higher interest rates and what that economic jolt could mean for consumer demand.
Bosse says, “I think we’re a little concerned about the economy in general. Yes, cattle inventory is still tight, but will people keep buying beef? It hasn’t hurt so far and it’s been kind of amazing, but as these diesel prices go up, that’ll increase prices for everything in the U.S. because everything’s tied to transportation,” he explains.
Higher gas is costing consumers at the pump and he thinks they will soon have to start picking where to spend their money.
“And I’m afraid usually it’s red meat that takes the hit,” he adds.
Cash the Key
The cattle market may also be seeing some positioning ahead of the USDA Cattle on Feed Report on Friday.
The key to whether or not this is a short correction is what cash does. If cash is higher it will trump all the other factors according to Bosse.
