Takeaway

The presenter argues that despite a recent pullback on Russian geopolitical headlines, the primary uptrend in corn and soybeans remains intact. The core support comes from shrinking global ending stocks and ongoing supply disruptions. The speaker's view is that producers should "reward the market" by selling into strength, as the path of least resistance is still higher for grains, while the cattle market appears oversold and may present buying opportunities on dips.

What the presenter said

• December corn posted its largest percentage gain for August since 1980, but reversed on Thursday following comments from Russian President Putin about a potential grain corridor or peace deal. [00:00:12]
• The market remains highly sensitive to geopolitical headlines from the Black Sea region, which are keeping prices supported due to major disruptions in world export flows. [00:00:45]
• The presenter believes the corn market is not overdone to the upside, noting the primary monthly trend has been moving higher for approximately 28 months, doubling prices in that time. [00:02:49]
• The fundamental support for grains and oilseeds comes from shrinking crops and ending stocks around the world, along with ongoing wars. [00:03:33]
• For soybeans, the market is closely watching South American production, especially with the potential impact of a "super El Niño" event. [00:06:37]
• Chinese buying remains a supportive factor, with bookings at the fastest pace in four years. [00:07:11]
• The cattle market was viewed as "overdone to the downside," but strong cash trade suggests the market is unlikely to continue its slide. [00:08:02]
• The cattle market's direction will be highly dependent on the broader economy; a strong economy is supportive, while a weakening stock market or economy would create headwinds. [00:09:19]

Trade ideas

• Instrument: Corn

  • Direction: Neutral
  • Thesis: The presenter advises rewarding the market incrementally on the way up, given the primary trend is higher and ending stocks are shrinking. They are not advocating for being bearish.
  • Entry/Stop: N/A
  • Target: "$6"
  • Horizon: medium_term
  • Conviction: Medium

• Instrument: Soybeans

  • Direction: Neutral
  • Thesis: Similar to corn, the idea is to reward the market on rallies. The potential for higher prices exists if the El Niño event impacts South American production.
  • Entry/Stop: N/A
  • Target: "$13-$13.50"
  • Horizon: medium_term
  • Conviction: Medium

• Instrument: Cattle

  • Direction: Long
  • Thesis: The market is seen as overdone to the downside with strong cash support. The presenter suggests that "breaks are for buying, rallies are for selling."
  • Entry: On breaks
  • Stop: N/A
  • Target: "New highs or higher highs (later next year)"
  • Horizon: short_term
  • Conviction: Medium

Levels and data cited

• Price Levels:
  • December Corn: 549.75 (noted as "just a shade under 550")
  • Corn Target: $6
  • Corn Yield: 177 bushels/acre (level that would "feed the bull market")
  • Soybeans Target: $13, $13.50
  • Soybeans Other: $11.50, $12 (previous selling levels)
• Data Cited:
  • Pro Farmer report: Noted that December corn's August gain was the largest percentage gain since 1980.
  • USDA WASDE report: The upcoming September report is expected to have potential yield adjustments.

Risks and what would invalidate this

• Geopolitical headlines (e.g., peace deals, truces, grain corridors) could cause sharp, unpredictable market reactions.
• Uncertainty regarding the repair of Black Sea shipping and energy infrastructure.
• The potential for a "black swan event" in the market.
• A significant negative impact on South American soybean production from the El Niño event.
• A deterioration in US-China relations or a slowdown in Chinese buying.
• A weakening stock market or broader economy would be a headwind for cattle prices.