Takeaway

The presenter argues that the current sell-off in grains is fund profit-taking ahead of the WASDE report, rather than a change in fundamentals. The speaker highlights bullish factors, including strong soybean export demand and Black Sea tensions, and anticipates the USDA will cut corn yields, pointing to StoneX customer survey data that suggests a higher yield than the average trade guess.

What the presenter said

• Grain and livestock futures were broadly lower this morning. [00:23]
• The presenter attributes the grain market downturn to profit-taking by funds, which hold massive long positions. [00:40]
• Bullish factors remain, including rising crude oil and the ongoing Black Sea conflict, with Ukraine striking Russia's main commodity port, Novorossiysk. [00:54]
• StoneX's September customer survey estimates corn yield at 182.9 bu/acre (a drop of 1.9 from August) and soybean yield at 53.0 bu/acre (unchanged). [02:15]
• The market may be trying to price in a corn yield even lower than the average trade guess of 178.2 bu/acre. [03:57]
• The USDA is not expected to make a large adjustment to its current soybean yield estimate of 52.7 bu/acre in the upcoming report. [06:49]
• Soybean demand is strong, evidenced by flash sales of over 16 million bushels and overall export sales reaching a four-year high. This is significantly tightening the balance sheet. [08:41, 09:36]
• In the cattle market, the presenter believes the worst of the psychological impact from Canadian beef imports and border reopening may already be priced in, with the market attempting to find a bottom. [11:39]

Trade ideas

• None stated. The presenter's market view is that grains are undergoing a technical pullback on pre-report positioning despite bullish fundamentals, while the cattle market is consolidating and may have priced in recent negative headlines.

Levels and data cited

• StoneX Sept. Customer Survey (Corn Yield): 182.9 bu/acre
• StoneX Sept. Customer Survey (Soybean Yield): 53.0 bu/acre
• Average Trade Guess (Corn Yield): 178.1-178.2 bu/acre
• Current USDA (Soybean Yield): 52.7 bu/acre
• Daily Flash Sales (Soybeans): Over 16 million bushels
• Daily Flash Sales (Corn): 7.2 million bushels
• Soybean Export Sales: At a 4-year high

Risks and what would invalidate this

• Escalation of the Black Sea conflict impacting commodity flows.
• Extreme weather (wet patterns, heatwaves) impacting final crop yields.
• Trade disputes, particularly between the US and Canada, negatively affecting efficient supply chains.