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Aggressive farmer selling as harvest progresses means elevators are absorbing heavier ownership of corn, soybeans and wheat, according to a report by CoBank lead economist Tanner Ehmke. Growers should prepare for potential trickle-down effects on cash prices and basis levels.
With elevators holding larger inventories financed at higher interest rates and trading at higher prices, the cost of carrying grain is up significantly, Ehmke said. At the same time, limited carry in the futures market in soybeans and wheat means merchandisers have little buffer to cover storage and borrowing expenses.
On top of that, rising freight rates and diesel surcharges ultimately affect local cash bids.
- “A railroad surcharge of 50 cents per railcar-mile over a 1,000-mile shipment translates to approximately 14 cents per bushel,” Ehmke wrote. “If end users are unwilling to absorb the additional transportation cost, elevators must recover it through weaker local bids, effectively widening basis.”
Ehmke said fuel costs might not be fully reflected in the market and may become more apparent after harvest when grain movement increases and transportation demand intensifies. “If fuel costs remain elevated, elevators may face a choice between accepting lower margins, widening basis levels or delaying shipments,” he wrote.
Market recap: It was the soybean market’s turn to snap a losing streak Thursday, ending modestly higher after an eight-day slide that knocked 47 ¼ cents off the November contract. Continued demand from China, including rumors of more cargo purchases in the pipeline, and a tailwind from surging crude oil helped spark some tepid short covering. Corn futures, however, failed to build on Wednesday’s bounce, dragged down by wheat. Cattle futures paused their rally as traders await Friday’s Cattle on Feed figures (see item below), while lean-hogs slumped to yet another contract low on weak cash fundamentals.
- November soybeans rose 7 ¾ cents to close at $12.53.
- December soybean meal fell $1 to end at $347.30, while December soybean oil gained 77 points to finish at 66.74 cents.
- December soft red winter wheat fell 3 ½ cents to $6.24 ¾ for its lowest close in three months.
- December hard red winter wheat lost 7 ¼ cents to end at $6.65 ¾, falling to its lowest in more than three months.
- December spring wheat dropped 9 ¾ cents to $6.41 ¾.
- December cotton fell 104 points to 80.79 cents on profit taking tied to spillover pressure from a sharp fall by U.S. stocks.
- December live cattle finished unchanged at $231.125, while November feeders fell $1.19 to $346.925 after both notched three-month highs in Wednesday’s session.
- December lean hog futures fell $0.175 to close at $65.55 after gapping lower at the opening bell to hit another contract low.
NWS in wildlife… It was only a matter of time, but a New World Screwworm infection was found in an elk in Texas – the first confirmed case of the parasite in U.S. wildlife. USDA confirmed the case late Wednesday in an elk on a game ranch in Pecos County. Wildlife infestations have been a top concern for cattle producers, whose animals graze on the same ground. As of Oct. 21, there were seven active NWS cases in the U.S. Since the first case in June, there have been 59 recorded cases in two states. Looking at the monthly totals, there were only three in September compared to six in the last week.
USDA, in an X post, noted the case was reported after the elk was harvested by a hunter, which the agency said underscores “how vital hunters, landowners, and outdoor enthusiasts are in spotting and reporting NWS early.”
USDA urged hunters to stay alert for:
- Maggots in wounds or body openings
- Open or foul-smelling injuries
- Weak, isolated, or distressed animals
- Signs of infestation around the nose, mouth, ears, eyes, or genital areas.
Read more: Screwworm spreads to wildlife: USDA urges producer vigilance as cases rise
Exchanges oppose perpetual oil contract… Commodity exchanges urged regulators to withhold approval of Kalshi Inc.’s proposed perpetual oil futures contract and close a loophole that gives retail traders access to offshore platforms, Bloomberg reported. In a public comment, the Commodity Markets Council, which represents derivatives exchanges including CME Group Inc. and several trading houses, said perpetual futures pose significant risks to market integrity. Perpetual futures are contracts that let traders bet on an asset’s future price without an expiration date, using periodic “funding fees” to keep the contract price pegged to the underlying market price. Kalshi earlier this month debuted a 24-hour, five-days-a-week contract linked to West Texas Intermediate oil futures with a 10-year expiry, the report noted, adding that the betting market platform on Tuesday sought approval of a fully perpetual oil futures contract, which would also trade five days a week but never expire. CME recently suspended its own plan for a round-the-clock oil contract after industry pushback.
U.S. ranks third in protein security… The 2026 Protein Sovereignty Index released this month showed most countries remain vulnerable to protein supply disruptions, Agri-Pulse reported. The U.S. ranked third globally on the sovereignty index, produced by Full Circle Biotech, which measures the ability of countries to maintain affordable protein supplies during disruptions to agricultural production. Agri-Pulse said Canada ranked first with a score of 82.8, followed by Argentina at 79.3 and the U.S. at 78.3. The U.S. was classified as “Resilient,” but the report flagged vulnerabilities in its phosphorus supply and cattle processing sector.
China urges Bab al-Mandeb opening… China on Thursday said in a joint communique with Djibouti that it backs “constructive efforts” to ensure international shipping lanes are safe and open, marking its first formal statement with a Red Sea nation on the fallout from the U.S.-Iran war, the South China Morning Post reported. The statement was released a day after Chinese Foreign Minister Wang Yi and his Djiboutian counterpart Abdoulkader Houssein Omar met in Beijing. Chinese analysts said the situation in the Red Sea had not yet escalated to a level that warranted direct naval escorts, though Beijing would closely monitor the region and might take action if the country’s shipping came under threat, according to the report.
Cattle on Feed due Friday… Placements will likely again be the most closely watched metric, along with a quarterly breakdown of the heifer-steer ratio as traders look for signs of herd rebuilding in Friday afternoon’s monthly Cattle on Feed Report from USDA. A poll by Reuters found that analysts, on average, see cattle inventories as of Oct. 1 at 11.452 million head, up 0.3% from last year. Inventory is expected to remain near-steady despite placements being expected to fall 7.4% from year-ago levels at 1.871 million. Marketings are also seen falling 7% to 1.518 million head. If realized, the average analyst estimates for both placements and marketings would be record lows for the month of September. Read Pro Farmer Economist Spencer Langford’s preview of the report here.
Protect your cash flow… Soaring input costs continue to pressure farm margins. Pro Farmer Market Analyst Hillari Mason details how strategic marketing, debt management and tax planning can keep operations liquid in 2027. Read it here.