MARKET UDPATE

You can scroll to read the usual update as well. As the written version is the exact same as the video.

Timestamps for video:
USDA Preview: 0:00min
Great Export Sales: 3:00min
Corn: 4:00min
Beans: 7:30min
Wheat: 10:20min
Cattle: 12:30min

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Overview

Grains higher across the board which feels like technical buying more than anything.

Early this morning we alerted our very first buy signal since March 4th. It was for corn, soybeans & wheat.

We will get into more details about this, but if you missed it: CLICK HERE

Today we will be mainly going over the technicals, as there isn’t much fresh news fundamentally and we've dove deep on the fundamentals several times.

First, let's go over the upcoming USDA report for next Tuesday.

USDA Estimates

Here is the trade estimates for next week's report:

🌽 Corn: 184.3
🌱 Beans: 52.9

To get these trade estimates Reuters polled 17 analysts.

Here is all of their estimates.

The lowest corn yield was 182.5 from a few analysts.

Highest was 188.100 from StoneX.

The average of all of these is 184.3.

The lowest soybean yield guess was 52.

Highest was 53.6. An interesting thing to note is that this high guess for soybeans is smaller than last year's high guess of 53.9.

Keep in mind acre adjustments are also possible in this report.

Here is a visual of the analysts corn estimates from Karen Braun.

StoneX is the outlier on the high side. As they were the only analyst that had over 185.5

Most analysts fell around that 184 to 185 range.

Here is a visual that shows corn carryout for different years, with this year's number using the trade estimates of 1.9 billion bushels.

This is clearly a bearish number. But this is still below last year at this same time.

Our lows in Dec corn last year were $3.85 on August 27th. Last year we spent only 30 days trading below $4.00

Last year we did not see carryout drop below 1.9 billion until December.

Another reason why I don’t think a sustained move below $4.00 would be justified here. Meaning I think it is definitely possible, but I don’t think it lasts extremely long.

Given that this market has likely priced in somewhere in the realm of a 185 yield and we are trading at the same levels as last year, I think it would take a pretty high yield or higher acre number to get a super bearish reaction on this report. (Altough possible). The market knows a big yield is coming and we've been pricing it in.

Here is a visual of soybean carryout and it's changes based on how yield changes.

As always, this does not account for demand.

But with that 52.9 bpa yield estimate, it puts new crop carryout right about the same as old crop and the last two years.

Yield is far from being fully determined in soybeans. So there is plenty of room to see this swing substantially higher or lower due to fewer acres allowing for a smaller room for error and bigger swings on carryout.

Huge New Crop Corn Demand

Today we saw massive new crop corn export sales.

They came in well above the trade estimates.

Strong wheat numbers as well.

Chart from Karen Braun

Just look at these export charts from the Brock Report.

New crop corn exports are the best since 2021/22 which was entirely led by record buying from China.

We've seen zero buying from China this year. Which makes this even more impressive.

I don’t know how anyone could argue against this demand.

New Crop

Old Crop

For the week, wheat saw their best export sales in a decade.

We've been seeing some nice demand lately from wheat.

Hopefully it continues, as this is one path to a less burdonsome US balance sheet.

Chart from Allendale

For reference, US wheat stocks to use ratio is the highest since 2020.

Not a bullish number by any means.

Todays Main Takeaways

Corn

Now let's dive into this morning’s buy signal.

First off, this buy signal is NOT me calling a harvest low.

I would love for this to be the harvest low. But it is far too premature to claim it was. I am very skeptical this was the definitive low.

However, I think we are due for a bounce based on several different reasons. I could be wrong, but here is why I could see a bounce:

Reason #1

Yesterday Dec corn broke $4.00 and posted new contract lows before rallying into the close and leaving a textbook hammer pattern.

This is often a sign of a reversal.

Basically you take out everyone's stops at $4.00, then reverse us higher.

Reason #2

We had been saying for a while that if Dec corn broke $4.09 our next stop was likely $3.95

Why?

That was the 100% fib extension lower from the 4th of July weekend sell off.

Meaning this rally equaled the exact same size as that one.

We nearly tapped it yesterday before bouncing.

Reason #3

The RSI (relative strength index) for corn was sitting at it's lowest levels since March.

Meaning corn was severely oversold. So I think we are due for a bounce.

The stochastics were also bottomed out and flipping bullish.

Neither are perfect indicators, but they help give us some confidence.

If you follow someone like Roach Ag, how they identify their buy and sell signals is largely by soley using stochastics.

2024 vs 2025

Last year we spent just 30 days below $4.00

Our absolute low was $3.85

Meanwhile our supply and demand situation is tighter this year.

What reason do we have to spend a longer amount of time below $4.00 or take out those $3.85 lows by a wide margin?

Short Term Target & Power of 61.8%

Our short term target for this bounce is going to be $4.13 to $4.17 (Red box)

So if you followed this buy signal, this is the area I am looking for.

I am not selling cash corn here this far below the cost of production. This is simply my target to exit this buy signal.

Why?

This is the 50-61.8% retracement of the recent sell off.

If we look at previous bounces, you'll notice the 61.8% level is extremely common.

The July bounce? Failed at 61.8% of the June sell off (Orange box)

The May bounce? Failed at 61.8% of the April selll off (Green box)

This level is where the market makes a decision. This is either just a corrective bounce, or something bigger. If we break above it, we'll know if it's something bigger. But until then, this is seen as a corrective bounce.

We could very possibly get this bounce up to that golden zone before coming back down and posting a new low.

Seasonals:

Although I am very hesitant to call this our true bottom, seasonals do all suggest a bottom within the next 30 days.

The 5 year says we bottom now. But something to be aware of is that 2020 could also skew this data. As that rally was orginally ignited by the derechos.

Soybeans

Just like in corn, I am very hesitant to call this a harvest low.

I think soybeans have the easiest path to a tighter balance sheet, but short term this is the market I am most cautious about. As corn and wheat are already beat up and sitting at contract lows.

However, there are reasons why I could see soybeans getting at least a short term bounce here as well.

We had talked for weeks that if Nov beans broke below $10.00 our next stop would be $9.80

We finally hit that downside target.

$9.83 was the 100% fib extension lower from the 4th of July weekend sell off (the exact same methodology used in our downside corn target).

This level also perfectly lines up with trendline from our December and April lows. Both times we touched this it resulted in a bounce.

We also have a potential falling wedge pattern in place.

This is often viewed as a bullish pattern. BUT you need an upside breakout for confirmation, as we could just as easily get a downside breakout.

RSI & Stochastics

Along with corn and wheat, soybeans were very oversold as well.

The RSI was at it's lowest levels since the April trade war fear sell off.

The stochastics were bottomed out and now shifting higher which marked past lows.

As always, indicators are far from perfect. But they help analyze a market.

Short Term Target & Power of 61.8%

Our target is going to be $10.12 to $10.19

Again we are not making cash sales here. This is simply the target to exit the buy signal.

This is the 50-61.8% retracements of the recent sell off.

If you look at the last 2 bounces, they both rejected right off the 61.8% level of the prior sell off (Green and blue boxes).

2024 vs 2025

Sorry, I know I've shown this chart countless times.

Our absolute floor last year was $9.60

We are sitting at $9.90 today with a carryout that is substantially tighter than it was at this same time last year.

Sure we could go lower, perhaps even as low as $9.60 But I think this is a good area of value.

Unless demand gets butchered, what reason do we have to take out last year's lows?

August Seasonal:

The last 2 years we found our bottom in the middle of August.

So I would like to think we start to find those harvest lows relatively soon. But that does not mean we couldn’t get a leg lower before hand.

Wheat

In my personal opinion, wheat is the one that feels like it has the most "upside potential" of the grains here. Partially because it is the one who has been beat up the worst.

Let's dive into the charts and why I could see a bounce.

Sep KC Wheat

We are sitting in a massive falling wedge pattern.

This is seen as a bullish pattern.

Our target is going to be 38.2% to 50% of this recent sell off. ($5.37 to $5.47)

That lines up with a test of the top of the wedge.

Break above the wedge and you probably see higher prices, but for now it is seen as resistance and our target to exit this buy alert.

Dec KC Wheat

Dec KC wheat bounced right at the 61.8% fib extension lower from the Feb highs.

This means that this most recent sell off from the June highs, equals 61.8% of the size of the sell off in February. (I marked this with the arrows)

A very common spot for a market to bounce.

Again our targets here are 38.2% to 50% of the sell off from June. ($5.58 to $5.68)

Which lines up with another test of the top of this wedge.

Continuous KC Wheat

We are right at this support from last year on the continuous chart.

This was our resistance back in 2019-2020.

Old resistance is now support.

Sep Chicago Wheat

We had a perfect bounce off the bottom of this wedge.

Upside target is 50-61.8% of the recent sell off.

This lines up with the top of the wedge as well.

Continuous Chicago Wheat

Continuous Chicago was also at it's last line of support.

As we have held this support box on several occasions.

Sep Chicago Wheat Indicators

The RSI was severely undersold.

The stochastics were also bottomed out and flipping bullish.

Cattle

The cattle market continues to soar.

However, we are still cautious here and recommend puts for downside protection.

It is very hard to call a top in a bull market, all you can do is be prepared and manage your risk for all scenarios.

We prefer puts over futures, as if this market keeps running using futures is how you get yourself into an uncomfortable situation and run into margin calls.

We want to simply put in floors and allow the bull market to run.

I am not calling a top in this market. I just want to manage our risk.

Let's look at the charts.

Sep Feeder

We blew past my target box. Which was the 161.8% to 200% fib extension from the June rally.

The next fib is all the way up to the 261.8% fib at 356.

So that is the next target.

We are still showing slight bearish divergence, however the cattle market has ignored this several times. But something to be aware of.

Oct Live

Approaching that 200% fib extension from the June rally.

Also showing bearish RSI divergence.

Another reason why I like managing risk up here is the seasonal data.

If you went short cattle on August 1st and held it through September 5th it was a winning trade 9 of the last 10 years.

The only year is was not was 2023.

(Marked as 2024 on the chart as this data uses the Jan-25 contract)

Here is the chart from 2023 and the only year we did not trade lower after August 1st.

We topped on September 15th. So it is possible we just continue to run without a major correction.

A nasty sell-off did eventually follow.

Lastly here is the updated seasonal pattern.

Typically we start to correct soon.

This does not mean we have to do the same thing this year. Just something to be aware of.