Takeaway

The presenter highlights a potential catalyst for soybeans, with rumors that China may drop its 10% tariff, which would be needed to hit US export targets. This is layered on top of a record US crush and concerns over dwindling stocks, contrasting with a corn market facing harvest pressure and the risk of a profit-taking pullback from record long fund positions.

What the presenter said

• Soybeans have retested contract highs, driven by the meal market, and are consolidating just below those levels. [00:34]
• Rumors suggest China might drop the 10% tariff on US soybeans, a move seen as crucial for the US to reach the White House's 25 million metric ton purchase target. [01:00]
• While China has bought around 13 million metric tons so far, the presenter notes this is mainly for government storage, not for crushers, underscoring the need for tariff removal to compete with South America. [01:17]
• With US soybean acres down and yield in question, a significant increase in Chinese buying could quickly tighten already dwindling stocks. [01:55]
• The August soybean crush was a new record for the marketing year and 8% higher than last year, suggesting the US ran out of old crop beans due to strong domestic demand. [03:19]
• Corn is facing harvest pressure that is capping rallies. The presenter notes it is unusual for funds to be record long (430,000-450,000 contracts) right before harvest. [07:25]
• A profit-taking pullback in corn to around the $5.10 level is anticipated due to the heavy fund length and farmer selling. [08:29]
• High diesel prices (above $6) are a concern for their potential to increase fertilizer prices next spring. [06:25]
• Broader economic headwinds, including the upcoming Fed meeting on interest rates and high inflation, are expected to impact consumer spending and could weigh on red meat demand. [09:47]

Trade ideas

The presenter did not state any actionable trade ideas. The market view is mixed, with a bullish outlook on soybeans due to strong domestic crush and potential for increased Chinese export demand, but a more cautious-to-bearish view on corn due to harvest pressure and the risk of long liquidation by funds.

Levels and data cited

Price Levels: * Corn: Resistance at $5.50; potential harvest low support at $5.10. * Diesel Fuel: Trading above $6. * Soybeans: Previous North Dakota basis was $1.10-$1.50 under; current basis for Dec/Jan is "even". A potential 10% tariff removal by China was also mentioned. * Wheat: Recent tenders were priced $30/ton higher.

Data Cited: * White House: China has promised 25 million metric tons of soybean purchases. * China: Has currently purchased around 13 million metric tons of US soybeans. * US: August soybean crush rate was 8% higher than last year. * US: Diesel exports are around 22-23% of generation.

Risks and what would invalidate this

• China may not drop the 10% tariff on US soybeans, which would hinder export goals.
• Harvest pressure could cause a significant pullback in corn prices.
• Funds holding record long positions in corn could liquidate, causing a sharp sell-off.
• High diesel prices could increase fertilizer costs for next spring, impacting farmer profitability.
• Broader economic concerns (rising interest rates, inflation) could reduce consumer demand for commodities, particularly red meat.
• A potential ban on US diesel exports could be implemented due to high domestic prices.