Takeaway

The presenter highlights new contract highs in soybeans, driven by strong Chinese buying which may be front-loaded ahead of a potential US-China summit. The focus for corn is an upcoming USDA report; the speaker argues that if ending stocks come in at 1.528 billion bushels, the resulting sub-9% stocks-to-use ratio could trigger a rally. However, the presenter warns that record long fund positioning across the grains poses a significant risk of rapid liquidation.

What the presenter said

• Soybeans reached new contract highs, energized by flash sales to China totaling 34 million bushels for the week. [00:33]
• The speaker believes China may be front-loading purchases ahead of a scheduled September 24th US-China summit. [01:18]
• For corn, the key catalyst is the upcoming USDA report. A new crop ending stocks figure of 1.528 billion bushels would imply a sub-9% stocks-to-use ratio, which the presenter believes could excite the market and lead to higher prices. [04:24]
• The crop in the Western Corn Belt is not expected to be as large as last year, requiring the Eastern belt to compensate. [05:20]
• Rising energy prices, with crude oil trading above $100/barrel, are a significant supportive catalyst for the entire commodity complex. [01:47]
• The presenter notes that funds are record long in corn and near record long in soybeans, which presents a major risk of a fast liquidation and market downturn. [08:53]
• The cattle market has been in a "nasty downtrend" for 60-70 days and is looking for a bottom. A close above the 50-day moving average would be a technical signal of a momentum shift. [09:56, 11:09]
• Ongoing conflict in the Black Sea continues to provide underlying support for wheat and corn markets. [06:39]

Trade ideas

None stated.

The presenter's market view is that grains have bullish potential based on fundamental drivers but are vulnerable to a sharp correction due to extreme fund length. For cattle, the speaker is watching for a technical confirmation of a bottom, specifically a close above the 50-day moving average, before anticipating a change in trend.

Levels and data cited

Price Levels: * Crude oil: Trading above $100, with market calls for a $120 target. * November Soybeans: Potential round number targets at $13.50 and $14.00. * Corn: Potential price of $6 if stocks-to-use tightens. * Wheat: Currently trading with an $8 handle. * Live/Feeder Cattle: A close above the 50-day moving average is needed to confirm a bottom.

Data Cited: * USDA: Reported soybean sales to China and unknown of 18 million bushels this morning and 34 million bushels for the week. * USDA: New crop corn ending stocks estimate is 1.528 billion bushels. * Average trade guess: Corn yield estimate is 178.4. * StoneX: Corn yield estimate is 182. * COT data (2020-2023 stretch): Fund positions are record long in corn and near record long in soybeans.

Risks and what would invalidate this

• A cancellation of the September 24th US-China summit could negatively impact soybean demand.
• The record long fund position in grains creates a risk of rapid long liquidation, which would pressure prices.
• The USDA's reports on corn yield and stocks-to-use could disappoint bullish market expectations.
• Poor closeouts in fat cattle could prevent feed yards from aggressively bidding up calf and stocker prices.
• Dry conditions in wheat country could lead to reduced winter wheat acreage.