Corn, Wheat Stall as Traders Await China Summit – Market Analysis with Karen Braun

[YEAGER] Limited movement this week in the trade as harvest pressure starts to intensify for the trading week ending September 18th. The nearby wheat contract lost $0.11 and the December corn contract fell $0.03. The soy complex had three big influences from Oil meal and next week's summit between the U.S. And China. The November soybean contract added $0.07 and December meal gained five. 80 per ton December cotton shed $4.93 per hundredweight. October class three milk futures declined by $0.45. The livestock complex was lower. October cattle fell by three. 75th October feeders cut $9 and the October lean hog contract lost $3.43. In the currency markets, the U.S. Dollar Index found 111 points. October. Crude oil increased by $0.83 per barrel. Comex gold expanded by $30.20 per ounce, and the Goldman Sachs Commodity Index was even to settle at 75232. Here now to lend us her insight on these and other trends is regular market analyst Karen Braun. Hello, Karen.

[KAREN BRAUN] Paul, it's great to be here with you again.

[YEAGER] This week did not have the volatility it had. And it didn't even really have a whole lot of air coming out of the markets however. What's that old phrase lack of news means we're likely going to go lower. Is that do you think the overall theme this week.

[BRAUN] As you know, I think that we're in that place between we got the USDA report and now we're waiting on that summit that's happening next week between Trump and XI. And so, I think that we just really need to know the results of that meeting. We've been waiting for months for developments on this. We've been waiting for months to see if the tariffs are going to the additional tariffs are going to come off, whether China is going to come in and buy more than just soybeans, because they've been doing a good job with the soybeans. But we're looking for other stuff. And I think corn. Corn is the big one that I think has been on everyone's radar. So, I think that's why we're kind of hanging out, you know, post USDA report but pre-summit.

[YEAGER] Speaking of conversations, the Ukraine and China and Russia having their conversations about, you know what, let's not hit infrastructure. The wheat market seems to take that as what right now because again, movement was limited in that commodity. 

[BRAUN] You know what that that's an interesting question because, you know, like you said, Ukraine and Russia said we're not going to hit each other's energy infrastructure. And what did they do the next day? They hit the energy infrastructure. And I think, you know, looking at what's going on now and how the shipments really are limited from the Black Sea. I think the difference between now and when this first started in 2022 is that in 2022, Ukraine's exports were completely shut off for months because of all the damage that they sustained. And it was just unsafe to, you know, get in and out of the Black Sea. But now, but Russia was pretty much untouched. I mean, you know, there were sanctions and, you know, economic barriers. But this time, Russia's infrastructure is damaged as well. And that's a different. And that's going to be a more long term kind of effect here. Once, you know, they agree to make peace or, you know, stop the attacks, it's still going to take a minute to get things, you know, functioning back like they were.

[YEAGER] Let's go to corn because the fundamentals appear to be pretty darn good there for seeing some exports, seeing some maybe a little bit of rain dryness in other parts of the you got a whole lot of factors. What's the biggest one for you?

[BRAUN] Oh my gosh, that your list your list was long. But I could add like ten more things there that I think the corn market is looking at right now. I think for me, people are still questioning, all right, did USDA reduce corneal enough? How much lower? And you know, we're just starting to get some reports out of the fields now. And yeah, it's been raining in parts of the central Corn Belt this week. So, I don't think harvest has advanced maybe as quickly as it appeared like it would. But two results that I heard this week, both in Indiana, southeast Illinois, people out there, you know, collecting corn and beans actually in both were disappointing versus what was expected. And I think that dry finish that kind of snuck up in August after what was almost a record wet summer in many areas, Illinois, Indiana, Ohio. So, I think that that dry finish and warm finish may have taken a little bit off here at the end, but again, that's just a couple reports, right?

[YEAGER] So, it's even different from when you were out in the on crop tour just a month ago. And, and there's people looking at the number that came up from where you were at. If maybe we didn't go low enough. So, moving forward with that information, if I'm sitting at home right now, what am I looking at to maybe do next week, given I know you're not going to give me direct advice, but what are the things I need to watch?

[BRAUN] Well, I think that watching what needs to be watched ahead of this meeting is just kind of how much how much risk is taken out, you know, going into this meeting because even today, you know, I think that Bessent was going to be meeting with his counterpart just this weekend to talk preliminary stuff. And I think you may have seen a little bit of, you know, little bit of risk off. I mean, the risk that's on is incredibly high. I mean, funds are record bullish corn, soybeans, soybean meal collectively across the grain and oilseeds complex. So, I mean that's pretty risky. It's a risky position to be carrying into a meeting that really you know, I think people have been anticipating for months, years maybe. And so, I wouldn't be surprised if you kind of see people get a little bit, you know, tense or nervous or pull back a little bit. I wouldn't expect big changes before that meeting because again, we really need to know what's going to happen. But especially this weekend, if something were to happen with, you know, those preliminary talks. I mean, the market's going to be overly sensitive to every word.

[YEAGER] Okay. That's what I was going to ask is how. Because it doesn't seem to be that this week the market was sensitive. And so, moving forward next week again, which smoke signals speak the most to us right now, that could come in the soybeans specifically.

[BRAUN] Could come in soybeans. Well, I mean, leading up into the meeting, I think continuing to hear results out of the fields because I think the rains right now also are putting a little bit of moisture back into some of those bean fields that have dried out way too quickly after a hot and dry finish. But yeah, I think that people are pretty pleased with how the Chinese purchases have been going with soybeans. I mean, they seem well on their way to the 25 million metric tons. And, you know, they continue purchasing routinely every week. And so, I think there's no reason to believe they're not going to be fulfilling that. But at this point, I think it's not about soybeans. We now need more, you know, concrete information about what China plans to do beyond the soybeans, because we had that information back in the spring. We were given that carrot. And actually, they've really done nothing since.

[YEAGER] So, let's take China and take the weather out of the soybean equation. Give me the meal and the oil story and how that may be propped things up in different directions this week.

[BRAUN] Oh my goodness. Yeah. Meal is just meal has just rocketed. Right. And I think, I think that it's really hard though to separate. I think it's hard to separate those two right now from soybeans directly. And also, you know, you've got what's going on in energy right now. You know, in soybean oil is very much tied to that. And we're also looking at crush data, right? So, we just have so many factors that I think are coming at the soybean complex right now. But, but, but I, but I think that, and I'm not really sure about the products in this upcoming week, because that's not really the focus of, you know, this trade summit. And you know, what we're going to be focusing on this week. So, I'm really all about the soybeans this week. I think it's a make or break week potentially for soybeans. Just in terms of the relations that we have with our biggest buyer.

[YEAGER] Let's look at livestock. If we could. The cattle on Feed Report 102 on feed 91 place, 97% fed, which number is the headline for you?

[BRAUN] I think the placements because that's, you know, way lower than expected. I think we were expecting about 97%. And so, you know, you see 91%, I think that that's just going to confirm that this tight supply story isn't ending anytime soon. You know, we're not we're going to stay tight. There's not a there's not a light at the end of the tunnel just yet. And I think that, you know, I don't know if the cattle market wants to reflect that, because I know that we have been getting more imports in that may have finally, more beef imports. And I think that may have finally calmed things down a little bit. But this report is supportive of for the narrative that we have been talking about extensively for the last year.

[YEAGER] And the live cattle market. I mean, we see movements again, one way heavy, one way another. And we had it just since we last recorded last Friday. So is that still going to just be the norm here for the near term big movements.

[BRAUN] It could be. And I mean this year has been really heavy cattle news right. And any time that any commodity gets attached to politics, even then all bets are off. Right. So, so I think, I think that the fact that we haven't heard a lot of that headline news lately, you know, that we're waiting for direction, right? We want to know, are we are we going to increase imports? Is the government going to help us rebuild the cattle herd? And how right are we going to continue to reopen points along the US-Mexico border? And how is that going? Are we containing screwworm? You know, all of these factors? I think it's really like a hurricane of factors.

[YEAGER] Real quick with hogs on a few seconds. We're still at 12 month lows. Any light at that tunnel?

[BRAUN] You know what? Last time I was here I was talking about how funds don't like to stay short hogs. And you know what? They've stayed short hogs this whole time. And, you know, I just think that that that just really reflects on the persistence of that bearish story. And the supply is ample, you know, and people like beef more than pork right now.

[YEAGER] All right. Karen, great to see you. Thank you so much for your time and insight. 

[BRAUN] Yes.

[YEAGER] Karen Braun everybody, you've been watching and listening to our market analysis. If you are watching us online or on the PBS app, we are going to stay here and continue this discussion and Market Plus, our online only segment. Find it wherever you get your podcasts or at Markettomarket.org to watch, listen, or read. Last week, many of you had strong reactions about one of our stories. See what others are saying and you can weigh in with your thoughts on facebook.com slash Market to Market. Show next week a story of passing the dairy to the next. Operator. Thank you so much for watching. Have a great week.

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