Several analytical firms claim we have now made our seasonal lows in the corn and soybean markets. Historically we tend to see the lowest values of the season in the first part of October when inventory supplies are the highest. While this may be correct, it does not mean the market is set to rally. If a bottom has been made, it really means futures will stop declining. This does not mean we will not see corrections but that the overall trend of the market will work higher. Current technical formations support this theory but cannot confirm a correction is taking place.

This is also the stage of the marketing year when we see the weakest basis values. Basis is the spread between futures and cash values and is normally the weakest when cash supplies are the highest. U.S. farmers are storing as much inventory as possible this year, and this has provided basis support. Strong processing margins have also favored cash demand and values. Buyers are aware of how much unpriced country inventory is in the United States though, and will limit basis strength to selective pushes to secure coverage until selling starts to improve.

Even though the U.S. is still in the midst of this year’s harvest, we are starting to see predictions for next year’s acreage released. One of the most noted of these projections is from the analytical firm Informa. Informa is putting U.S. corn acres for this coming year at 92.5 million compared to 94.87 million in 2023. Soybean acres are being projected at 86 million, up from last year’s 83.6 million. Total U.S. wheat plantings are forecast at 48.7 million, down from the 2023 plantings of 49.58 million.

The Brazilian firm ABIOVE released its 2024 soybean crop balance sheets with both production and demand forecast to increase. ABIOVE is putting Brazil’s 2024 soybean crop at a record 164.7 million metric tons. This is higher than most other projections and well above the 157.7 mmt crop from 2023. ABIOVE is also projecting soybean exports of 100 mmt for 2024, just under the 101 mmt for this year. Soybean crush is expected to come in at 54 mmt for next year, 400,000 metric tons greater than this year. Soy oil production was bumped up 100,000 mt to total 10.9 mmt and meal production was upped 300,000 mt to 41.3 mmt.

Chinese officials have released their September commodity import data with mixed numbers. Soybean imports for the month totaled 7.15 mmt, a 6.9 percent decline from September 2022. Year to date soybean imports stand at 77.8 mmt, an increase of 14.4 percent from a year ago. Corn imports for the month totaled 1.65 mmt, a 7.3 percent increase from last September. Year to date Chinese corn imports total 16.56 mmt, a 10.3 percent reduction from a year ago. China’s wheat imports for September totaled 620,000 metric ton, a large 66.4 percent increase from September 2022. January through September wheat imports stand at 10.17 mmt, an increase of 53.6 percent from the same period last year.

The real factor for the U.S. market is where these Chinese imports originated from, with the majority coming out of South America and Russia. Strained political relations and price differentials have impacted the amount of these grains and oilseeds China has bought from the U.S. and recent trade pacts will further decrease the U.S. share of China’s market.

We have also seen a shift in China’s beef and pork imports. China imported 250,000 metric tons of beef in September, 1 percent less than last September. Year to date Chinese beef imports are up 4.8 percent, however. China imported just 110,000 metric tons of pork in September, a yearly decline of 31.7 percent. Year to date Chinese pork imports stand at 1.27 mmt, an increase of 3.6 percent.

China also reports that its domestic meat production is up on the year with beef 5 percent higher and pork up 3.6 percent. The combination of these elevated domestic production figures and changes in the Chinese diets have altered the amount of product that needs to be imported, as has a slow economy that has reduced overall red meat consumption.

In the United States there is starting to be more signs of the economy impacting livestock production. Lenders across the United States are showing more interest in the high cost of feedlot replacements and negative return outlooks. Using current data, it will cost a cattle feeder an additional $80 per hundredweight to buy and finish an animal. Historically, October is the highest placement month of the year and there are thoughts this year we may see a sharp reduction to this volume. While these potential declines in cattle numbers is supportive, slowing consumer demand for red meat on a whole is offsetting its bullishness.

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