Howdy market watchers! 

How is it October and we’re still in the 90s!  It has been a hot, dry start to the 4th quarter and that is the case in many parts of the world sparking commodity buying across the grain complex.  

The exception of course is the path of Hurricane Helene across the US southeast extending into the south covering six states. Admittedly, I didn’t realize how damaging this was until seeing the extent of the damage and talking to clients in the region.  The death toll is already over 200 people and on the rise.  Flood waters have devastated homes, communities, businesses, roads and bridges.  

Seldom does a hurricane go this far inland with such force, which only served to increase the level of destruction.  Prayers for all of those in the path of this storm, many of whom have lost everything. In other parts of the country, a heat wave and flash drought are impacting crops.  

While dry weather will help to accelerate harvest for mature crops, it is hurting later maturing soybeans as well as winter crops that are now getting planted such as winter wheat and canola.  The hotter temperatures are reducing any sub-soil moisture we had as producers look to keep planting.  Some producers have decided to hold off on further seeding until temperatures cool off in hopes of precipitation chances.  However, there is very little in the forecast.  

This is not only in the US as Russia, Ukraine, Brazil and Argentina as well as Australia have turned dryer in recent weeks.  Winter wheat planting in the US is now 25 percent complete, slightly behind expectations of 27 percent, but ahead of last year and the average.  Ukraine’s winter wheat planting is now 37 percent complete versus 40 percent last year and unfavorably dry, which has resulted in reductions in production and export estimates for the coming year.  

Russia faces a similar situation to the extent that SovECON lowered export estimates this week and the Russian Grain Exporters Union called for export quota limits to be put in place to slow the pace of wheat leaving the country following elevated export volumes this summer.  Australia saw more favorable conditions during planting, but is turning dryer and was impacted by frost in mid-September.  Recall that Australia has the opposite growing season for winter wheat which starts harvesting in November and December and so this frost comes at a critical time.  

The USDA closed out September with the release of the quarterly stocks report and wheat production updates on Monday.  Corn stocks as of September 1st came in lower than expectations that were calling for an increase.  Soybean stocks also came in below expectations.  Wheat stocks came in slightly above expectations, but production was adjusted lower although higher than trade estimates.  
 

The next USDA report will be the monthly WASDE and Crop Production report on Friday, October 11th.  

Egypt announced another purchase of wheat for shipment from November to April this time in a private deal for Black Sea wheat.  As the Middle East conflict begins to escalate further with Iran attacks on Israel this week and Israel responses just getting started, Egypt and neighboring countries that rely on wheat imports are getting increasingly nervous about food security.  Saudi Arabia also tendered for hard, milling quality wheat this week.  

France, Europe’s largest wheat producer and exporter, on the other hand, is facing too much moisture as it continues to struggle harvesting its crop.  In fact, September was the wettest in 25 years and could also delay planting given harvest is progressing slowly.  

Fueled by short covering, these headlines helped the wheat market to surge higher on Tuesday and Wednesday this past week reaching the highest levels since late June surpassing all of the past three-month resistance levels.  Contracts traded to their 200-day moving averages before running into profit taking on Thursday and Friday.  Despite the late week selloff that found support at the 50 percent Fibonacci retracement level, it looks like the old resistance from early July and mid-September is now the new support level.  
 

South America has seen some reprieve from dry conditions that stalled the soybean rally this week.  Rains have been spotty throughout the country, but have been enough to slow the concerns as it remains early with soybeans just being planted.  Dryer US weather should start seeing an acceleration in row crop harvest over the coming weeks.  US soybean harvest is now 13 percent complete and well ahead of the average pace. 

Corn is now 14 percent picked, behind trade expectations at 17 percent, but ahead of the average pace at 11 percent. Harvest pressure on prices could therefore be a concern for near-term corn and soybeans to push higher unless the South America situation turns back dryer and export demand continues to strengthen. This past week’s US export sales were significantly higher than expected for corn, which were at a 44-week high, soybeans also at the upper end of expectations and higher than expected for wheat.  

The US port strike that came and went this week was welcome relief for many. Frankly, I was surprised to see a resolution this week with as tough as the Longshoremen Union president was talking when the strike only began on Tuesday.  However, the “agreement” is only temporary as it is just an extension through mid-January, but does include a 62 percent wage increase and some language about not adopting labor-reducing automation.  So, Christmas is back on folks!  

The 5-day rally in the US dollar index could be a headwind for the grain markets and likely the result of safe-haven buying amidst increasing Middle East tensions.  Friday’s stronger September US jobs report, 254,000 jobs versus 150,000 jobs expected, lends itself to the Federal Reserve getting closer to achieving a soft landing with prospects of another 50-basis point cut now less likely.  
 

Last week’s stimulus moves by China gave strong footing to global equity markets to start this past week although started to fade towards the end of the week. Given the PBOC has started stimulus measures to support the economy, the expectation is that they will continue with such moves should weakness return.  

This was also welcome news for the livestock complex that had another strong week with feeders now over $20 per cwt off the September 9th “bottom” for the recent move.  If you’ve been waiting for $250, we’re here on the front-months and in the low $240s in 2025 feeder contracts.  December fats reached the $187.500 while April fats reached $188.950 on Friday with an outside day that could signal higher trade next week.  
 

Drought conditions in the Southern Plains is also likely to result in further herd liquidation as cattlemen cull with spring calving calves now getting weaned.  The herd rebuild will get delayed yet again if conditions remain dry.  The good news is that hay stocks were able to be rebuilt this past year and prices will likely start to rise again.  

Sidwell Strategies offers both in one place and so join the Sidwell Team today! Sidwell Strategies is the one-stop shop to protect cattle with futures, puts, LRP or a combination of all, which is probably the best strategy overall.  

If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss risk management and marketing solutions to pursue your objectives.  Self-trading accounts are also available.  It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.  

Wishing everyone a successful trading week!  Let us know if you'd like to join our daily market price and commentary text messages to stay informed!

Brady Sidwell is a Series 3 Licensed Commodity Futures Broker and Principal of Sidwell Strategies.  He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com.  Futures and Options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at http://www.sidwellstrategies.com/disclaimer.