Takeaway

The presenter, Mark Knight, views the recent pullback in grains as routine profit-taking after hitting new highs, not a change in trend. He argues the path of least resistance remains higher, particularly post-harvest, driven by strong Chinese demand, Midwest weather stress reducing yields, and the ongoing shutdown of the Black Sea export corridor.

What the presenter said

• The current dip in grains is considered routine profit-taking after multi-year and new contract highs were set yesterday. [00:41]
• The presenter believes the path of least resistance for grains is still higher, even with seasonal harvest pressure. [01:08]
• Hot and dry temperatures in the Midwest are expected to reduce crop yields. [00:58]
• A post-harvest rally could push corn to the $5.75-$6.00 range, a level not anticipated before harvest. [01:42]
• The Black Sea is "basically shut down for business" as Russia and Ukraine target each other's export facilities, a bullish factor not fully priced into wheat. [03:01]
• Funds hold a near-record long position in both corn and soybeans but can maintain these positions for a long time. [03:33]
• China has remained an aggressive buyer of US grains despite recent price rallies. [05:47]
• Cattle markets are at nine-month lows, pressured by the removal of tariffs on Brazilian meat, open borders with Mexico, and the seasonal end of grilling season. [09:45]

Trade ideas

None stated. The presenter's market view is that grains have a higher path of least resistance post-harvest, while the cattle market remains under pressure from several negative factors.

Levels and data cited

• Corn: The presenter mentioned a pre-harvest price around $5.50 and a potential post-harvest rally target of $5.75-$6.00.
• USDA: The upcoming report is expected to show a 2-3 bushel decrease in corn yield, with market expectations around 177 bushels.
• China: Cited as having purchased 7.4 million bushels.

Risks and what would invalidate this

• Harvest pressure could cause market dips, as prices cannot go straight up through harvest.
• The record long position held by funds in corn and soybeans could lead to a significant sell-off if they decide to exit.
• Continued conflict in the Black Sea creates ongoing uncertainty for global grain supply.