During the extended holiday, U.S. soybeans traded in a weak and range-bound fashion, with limited volatility. The market still lacked a clear signal of large-scale Chinese purchases of U.S. soybeans, and speculative capital gradually exited. The tariff reduction list published after last week's U.S.-China summit did not include soybeans, cooling earlier hopes for Chinese commercial purchases of U.S. soybeans. The quarterly stocks report released by the U.S. Department of Agriculture last Wednesday showed that as of September 1, U.S. soybean stocks stood at 315 million bushels, down 3% year-on-year, notably below the market's average estimate of 324 million bushels, which provided some support to soybean prices. Because non-commercial net long positions in U.S. soybeans were near historic highs and the U.S.-China meeting did not deliver a clear bullish signal, funds began trimming long positions in early October, adding further pressure on U.S. soybeans. Although recent rainy weather slowed the harvest pace, as new-crop supply gradually enters the market, expectations of a record U.S. soybean crop weighed on sentiment. We believe the U.S.-China meeting further reinforced the linkage between U.S. soybeans and Dalian soybean meal. The main driver for the U.S. soybean board is continued Chinese purchasing, with supporting factors being the second Middle East conflict and the Russia-Ukraine war. Due to domestic soybean meal inventory buildup and deteriorating crush margins, the pace of future Chinese purchases of U.S. soybeans may slow somewhat. Recent weakness in crude oil also indicates that war factors have temporarily weakened. If both of these drivers fade, the board will begin to reflect bumper-crop pressure, which would create certain pressure for both U.S. soybeans and Dalian soybean meal. In the short term, Dalian soybean meal may see a downward adjustment. In the longer term, themes such as El Nino and the food crisis in the agricultural sector may continue to be hyped in the future. Therefore, for Dalian soybean meal, we do not expect a deep decline for now. Oils and fats: During the holiday, the U.S. dollar index continued to rise, and international commodities remained under pressure. Among them, U.S. soybeans and U.S. soybean oil were weak first and then strong, as persistent rainfall in the U.S. Midwest raised concerns about crop quality. BMD crude palm oil continued to trade weakly during the holiday due to near-term supply and demand pressure in producing areas. 1. Palm oil: Before the long holiday, high-frequency data had already shown that Malaysia's September palm oil production might increase significantly, with inventories potentially hitting a record high. During the holiday, data from MPOA, Bloomberg, Reuters and other institutions further showed that Malaysia's September palm oil production may have risen 16-19% month-on-month, and combined with a month-on-month decline in exports, inventories may have surged to around 3.4 million tons. Both September Malaysian palm oil production and inventories may have been at record levels. At present, the labor situation in Malaysia is stable. The sharp increase in September production may be due to abundant rainfall several months earlier, or to high temperature and humidity in August causing early ripening of fruit bunches, and some say it was due to concentrated market arrivals of fruit that had been delayed from harvest in August. Identifying the reason for the extremely high September Malaysian palm oil production is key, as it will affect October production expectations. In addition, El Nino is still developing, and drought in India and Malaysia continues. Judging by the NINO3.4 index, September almost entered a super-strong El Nino. If rainfall during the November-March rainy season in India and Malaysia is therefore below normal, Malaysian palm oil production and inventories may remain at high levels. Although production in India and Malaysia is expected to be damaged by El Nino in 2027, the current and medium-term supply and demand pressure in producing areas, especially Malaysia, is heavy. Indonesia's production began to decline in August due to wildfires, haze and other factors, and B50 will be fully implemented in October, but data releases lag, so production and demand changes cannot yet be verified. In addition, China's inventories may also rise to historically extreme levels in the short to medium term. Overall, the short-term board may have largely digested the bearish September Malaysian palm oil expectations, but given medium-term supply and demand pressure and a strong dollar environment, we recommend staying on the sidelines rather than buying the dip. Pay attention to macro sentiment and whether October Malaysian palm oil production offers an opportunity to reduce positions on a rebound. 2. Soybean oil: U.S. soybeans have entered the harvest period, and rain in the Midwest has made the latest harvest progress slower than expected. Although soybeans were not included in the U.S.-China $30 billion reciprocal tariff reduction list, which slightly disappointed the market, the commitment to annual purchases of 25 million tons of U.S. soybeans has not disappeared. Pay attention to whether there are significant changes in the pace and volume of China's post-holiday purchases of U.S. soybeans. Domestic soybean oil inventories are seasonally high in reality, and the medium term will enter a destocking cycle. Considering uncertainty over domestic crushed soybean supply from December to March, the volume of reserve auctions concluded remains key, and there may still be room for periodic recovery in the soybean oil-palm oil spread later. 3. Rapeseed oil: During the holiday, Canadian rapeseed prices were range-bound with an upward bias. Canada's new-crop rapeseed production continued to increase, and more than half of the harvest is complete but progress is slow. Australian rapeseed is about to have its production finalized, and the El Nino impact may end. Global new-crop production is again set to hit a record, but both supply and demand are increasing. Domestic rapeseed procurement in the fourth quarter is normal, and rapeseed oil inventories may rise slightly. There is no obvious trend logic for rapeseed oil on a standalone basis. Corn: On the overseas market, U.S. corn fell sharply before the National Day holiday and moved relatively steadily during the holiday. On September 28, the benchmark U.S. corn contract closed down 1.2%, mainly dragged down by the sharp decline in U.S. soybeans. Although corn and wheat were included in the tariff reduction list, the market generally believed that China's demand for U.S. grains was limited. On September 30, U.S. corn fell more than 4% in a single day for the benchmark contract due to bearish quarterly stocks data from the U.S. Department of Agriculture. The quarterly stocks report released by the USDA last Wednesday showed that as of September 1, U.S. corn stocks reached 2.095 billion bushels, up 35% year-on-year, the highest for the same period in seven years, and far above the market estimate of 1.918 billion bushels. Inventories far exceeding expectations meant old-crop corn demand may have been weaker than expected, prompting the market to reassess the U.S. corn supply-demand balance. After the stocks report was released, funds sharply reduced long positions, accelerating corn's decline. Once bearish data broke bullish expectations, stop-loss and technical selling were triggered in concentration, intensifying the downward move. However, after that day's plunge, U.S. corn moved relatively steadily during the National Day holiday. Although the USDA quarterly stocks data remains the biggest fundamental pressure on the current corn market, some traders believed short-term selling may have been excessive. The upcoming dry weather in the U.S. Midwest is expected to speed up corn harvesting, which is also weighing on U.S. corn prices. Weather forecasts show that most of the U.S. Midwest will be dominated by dry weather in the coming week, conducive to combines entering fields quickly. However, the eastern Midwest and Delta region are expected to see rain in the following week. Analysts on average expect U.S. corn harvest progress at 26% as of last Sunday. Domestically, during the National Day holiday, major corn-producing areas were in the harvest and market-listing stage, and corn prices were relatively weak, though the overall decline was limited. Jinzhou Port corn prices rose first and then fell, with a modest increase in arrivals and small price fluctuations. Northeast deep-processing enterprises mostly lowered quotes, but the reductions were also small. Grassroots grain sources in the Northeast are still being continuously harvested and listed, and market arrivals are expected to accelerate in mid-to-late this month. In North China, prices fell slowly during the National Day holiday. Because the pre-holiday decline was large and grain quality was good, it squeezed into the market for corn outflow from the Northeast, limiting further downside. However, during the National Day holiday, morning arrivals at Shandong deep-processing enterprises increased day by day, relatively dragging down corn quotes, and the number of enterprises lowering corn quotes gradually increased during the holiday. On the demand side, deep-processing enterprises purchased relatively actively, but their willingness to build inventories was limited. Downstream feed enterprises also had low willingness to build inventories considering factors such as the post-maturity period of new grain. The corn market currently has ample supply and continuous incremental new-grain harvesting and listing, while demand support is relatively ordinary, and price trends are seasonally weak. Overall, during the National Day holiday, spot corn prices weakened only modestly, far less than the decline in the same period last year. Current price levels are relatively low, near the planting cost line, so further downside is also limited. Attention should be paid to post-holiday grassroots selling willingness in the Northeast. If there is no situation like the past two years where mold caused forced selling, grassroots selling willingness will weaken noticeably after spot prices fall below the cost line, which can solidify bottom support and slow the pace of seasonal market arrivals. At the same time, when spot prices fall below the cost line and new grain is concentrated on the market, the probability of policy-backed purchasing and storage rises significantly. At the end of 2024, there was a case in which Sinograin announced increased storage after spot prices broke below planting costs. Therefore, although corn market fundamentals are weak, resistance to further declines is also strong, with relatively strong support from costs and policy expectations. That is, the real supply pressure is difficult to dispel quickly in the short term, but the board has relatively strong support from a cost-side valuation perspective. In terms of operations, we recommend maintaining a short-term short bias and watching for reverse spread opportunities between the January and May nearby and distant contracts. At the same time, it is necessary to closely track temperature changes in the Northeast. Once a warm winter or delayed freezing period triggers widespread passive selling, prices risk breaking through cost support. At that time, downside risk in nearby contracts and rebound expectations in distant contracts will rise simultaneously. From a medium- to long-term perspective, during the full release of new-grain listing pressure, look for opportunities to build long positions on dips. Sugar: During the National Day holiday, overseas ICE raw sugar futures rose strongly in a one-way move. The benchmark contract quickly climbed from 17.61 cents/lb at the close on September 30 before the holiday, surged 5.12% on October 2 to 19.91 cents, a new 18-month high, and rose another 4.26% on October 5 to break through the 20 cents/lb mark, closing at 20.78 cents/lb. As of now (1:00 a.m. Beijing time on October 7), international raw sugar is still in an upward channel. Behind the surge in international raw sugar, three narratives have clearly played a driving role: (1) Intermittent rainfall in Brazil's center-south region slowed sugarcane crushing and port logistics, temporarily blocking exports from the world's largest supplier and directly pushing nearby prices higher. (2) During Brazil's election voting period, the Brazilian real rose too quickly against the U.S. dollar, and the exchange rate breakout restrained Brazil's short- to medium-term sugar exports. (3) ICE raw sugar delivery receipts were relatively large. Looking ahead, we believe the fundamentals of international raw sugar are clearly and distinctly stronger than those of domestic Zhengzhou sugar, with more drivers and more topics. However, after international raw sugar rose above 20 cents/lb, Brazil's hedging space became huge, the election outcome remains unclear, and if the sugar mix in the subsequent crushing season rebounds and the crush-ending pace recovers, speculative longs previously trading international raw sugar may sell off in concentration, creating retracement risk. Unless weather factors have a clear impact and减产 expectations materialize, upside room for international raw sugar may be difficult to open directly. Turning to the outlook for Zhengzhou sugar, the rapid rise in international raw sugar during the National Day holiday will indeed, to some extent, quickly drive a short-term trending rally in Zhengzhou sugar. Zhengzhou sugar may open higher after the holiday, but chasing the rally is still not recommended. In the 26/27 crushing season, domestic sugar production is expected to be very high, and dependence on imported sugar may decline somewhat. It remains to be seen whether this internal-external linkage remains as solid as before. We believe that at present, a trend-based rally has not yet been confirmed to have started, and the bottoming range may already have been established. Domestic sugar currently faces three problems: first, the inventory base is too high, and even if destocking accelerates, the absolute level still suppresses the board; second, supply is high, domestic sugar production is expected to be high, and after October the new season's sugar will be concentrated on the market, again pressuring supply, while policy variables for import supplementation still have room; third, warehouse receipts are high, and pressure above the board is obvious. Therefore, the conversion of the Zhengzhou sugar term structure from contango to backwardation is a slow variable. International raw sugar prices do indeed have upward drivers, but whether domestic and international sugar prices can decouple still needs observation. At present, Zhengzhou sugar board fluctuations are mainly phased repairs, and it is not advisable to bet too early on a trend reversal. Guard against irrational chasing of rallies, and try as much as possible to obtain chips in the bottom range, mainly through rotational operations. Cotton: During the holiday, ICE cotton strengthened somewhat, recovering part of its decline. On the one hand, rainfall in major U.S. cotton-producing areas increased, and the market worried about harvest progress and quality. On the other hand, U.S. September nonfarm payrolls came in surprisingly weak, rate hike expectations weakened, and combined with the earlier oversold board, funds covered some positions. Domestically, the new-crop purchase price has attracted much attention. Ginning mills and cotton farmers are relatively conflicted. Enterprises with pre-sales and pre-hedging purchase normally, while enterprises without pre-hedging face a dilemma, worried about the risk of widening cost inversion if prices fall later, but if they wait, they face the problem of reduced new cotton resources and insufficient purchases. Against this backdrop, seed cotton purchase prices are relatively firm and have rebounded to the pre-holiday decline level. Widening cost inversion may provide support to the board. Demand changes little, and the peak season is clearly not strong. Both spinning mills and fabric mills show destocking of raw material inventories and product inventory buildup, with poor shipments and a slow pace of movement. In summary, the slight rise in seed cotton prices during the holiday plus the pull-up in U.S. cotton may provide some support to the board, and Zhengzhou cotton may fall back into range-bound trading after a rebound.