• Soybeans were lower overnight as the market consolidated late week gains, but November had support under the 20-day moving average and was near the high of the day by the close. News ahead of the weekend was limited, but markets are anxious for more details on upcoming negotiations with China. Weather is also being watched as rains so far this week have been widely scattered, rather than the broad coverage that had been hoped for. Better rains and cooler temperatures are in the forecast for the next week. For crops in the Southern parts of the Midwest it could be too little, too late. The Commitment of Traders report showed that as of Tuesday funds were net short nearly 59,000 contracts in soybeans (-2,600), net long 56,900 contracts in soymeal (+10,000), and net short 97,100 contracts in soyoil (- 5,700). Funds are again holding a record large short soyoil position. November soybeans closed above the 50- day moving average on Friday for the first day since late May. Assuming there is no major geopolitical surprises over the weekend, a firm outlook is offered for early trade next week.

• Chicago corn futures traded mixed through the session, ultimately ending a shade lower. Price action remains rather dull. Input is mixed between favourable Midwest rain due in the next 3-4 days, strong demand, and ongoing severe drought in Europe. Crop ratings on Monday will be steady, and so yield models will maintain potential of 178-179 bushels/acre. However, all eyes will be on Pro Farmer’s tour next week for validation of NASS’s initial lofty ear weight forecast. Supply will stay in focus into the latter part of the month.

• However, price determination thereafter will be centered upon demand, which will be strong. DDG prices are recovering from multi-week lows, and across the Midwest are again above the price of corn. Feed use is robust, as evidenced by strong wheat/corn basis levels across the Plains. Look for a strong opening Sunday if weekend rain fails to materialise as forecast. Managed funds on Tuesday were short a net 25,000 contracts.

• Wheat futures worldwide rallied sharply on news early this morning indicating Russia is beginning to meet with both the export and livestock sectors. Reports have been rather inconsistent through the days. But that the issue has arisen so quickly is yet more evidence of this year’s tight major exporter balance. Key to any decision made by Russia will the state of its domestic wheat prices. The recent boost in Russian price near ports is clear. However, prices in Russia are not yet overly expensive. Close attention will be paid to Black Sea wheat and flour prices in the weeks ahead. Otherwise, Gulf wheat is still highly competitive against EU origin near term, and against Russian origin by Nov/Dec. Funds in Chicago are net long a sizeable 67,000 contracts in Chicago. This may make rallies next week a bit more arduous. Fundamentally, breaks should be used to extend supply coverage. Australia and Canada remain dry.

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