• True to seasonal form, Chicago corn, soybean and wheat futures are higher at midday at the calendar gets ready to turn to September. The cash connected old crop liquidation has ended with September first notice day, and Chicago is now able to sustain a recovery. Corn has been the upside leader with wheat/soybeans following. We note that the soybean market did not react to the huge FC Stone soybean yield estimate of yesterday. Chicago has fallen sharply into the end August and a secondary seasonal low has formed. Our expectation is for a higher close into the long holiday weekend. The Russian ag ministry meeting with its exporters will be closely watched and will likely direct Chicago prices next week.

• Stats Canada estimated their 2018 all wheat crop at 29.0 million mt, down 3.5 million from the August WASDE estimate and at the lower end of trade expectations. The estimate included 5.0 million mt of durum with 24.0 million of spring wheat production. A year ago, Canada produced a wheat crop of 30 million mt with exports of 22.10 million mt. We see 2018/19 Canadian wheat exports of 21-21.5 million mt including with 2.8 million to the US. We find it likely that the final 2018 Canadian wheat crop will end up around 28.0 million mt. Stats Canada estimated their 2018 canola (rapeseed) crop at 19.1 million mt, down 1.0 million from trade estimates that averaged 20.2 million mt. The USDA estimated the Canadian canola crop at 21.1 million mt. The smaller harvest will cut both crush and exports.

• Corn producers across the S Midwest will start their corn harvest late next week with the market starting to listen closely to yield estimates. As we have reported, Delta farmers are seeing variable and generally disappointing corn yields that are averaging some 10-20 bushels/acre below last year. The blame is being placed on excessive heat which hit the crop during its key stages of development. Kernel size and weight are below prior years.

• The US and Canada are trying to reach a trade deal has been elusive so far. Ag issues remain including dairy. If the deal gets done, it will be on the pressure of the clock. If the US does not include Canada, the Mexico trade deal will have to go through a lengthy review and approval process. The Trump Administration will have to offer concessions to get a final NAFTA deal.

• The central US GFS weather forecast has excessively wet weather conditions that will be centered on the WC Midwest and the Great Lakes into mid-September. Unfortunately, the wet flow persists into the 10-15 day period which will only exacerbate flooding. This is raising concern for the early harvest. Flooding is likely with soils saturated from prior rains. There is no evidence that the last half of September will bring a drier flow. Accumulations through the 10-day period are estimated in a range of 2-6.00 inches plus. The heaviest totals target; NE, IA, MN and WI. Temperatures stay near to above normal with no cold in sight. Minimum lows into mid-September across the Northern US/Southern Canada will be in the 50’s to mid-40s. The E Midwest will endure heat with highs in the 90’s.

• The IMF has said that Argentina has its full support which has rallied the peso to 37.5:1. However, it is the talk about the heavy rains across the W and N Midwest and disease pressure that could lower yield potential. Stats Canada’s lower wheat crop tightens world exporter stocks and makes the size of the Aussie crop and Russian actions more important. Secondary seasonal Chicago lows were likely forged this week.

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Weekend summary 31 August 2018

• Stats Canada will be releasing their August crop production estimates on Friday. The big question of traders/producers is how has the heat/dryness since late June impacted the spring wheat and canola crops. WASDE in their August estimate pegged the Canadian wheat crop at 32.50 million mt, which is 2.5 million larger than last year. Most private estimates have the crop at 29-30.5 million mt so a crop cut is anticipated.

• Mixed and low volume has been Chicago this morning as corn bounces, while wheat and soybean correct a portion of Wednesday’s rally. This is “get down” day and everyone is reducing their net long September positions with first notice day on Friday. There is a bullish wheat story in the offing for US/world markets, but we are still in the transition phase from a supply to demand bull market. Russia is still pumping out record wheat tonnages for export to get ahead of a strongly rumoured export tax. The message for wheat traders; positioning long on breaks for a rally into Q1 2019. We doubt that traders want to be too short of wheat ahead of Friday’s Stats Canada estimate and Monday’s Ag Ministry meeting with Russian grain exporters. We hear that the Trump Administration is getting close to announcing that the US will be able to pump E15 yearlong, but the exact timing of the “go ahead” is yet being decided.

• US weekly export sales for the week ending Aug 23 were; 15.2 million bu of wheat, 27.6 million bu of corn (old and new), and 25.8 million bu of soybeans (old/new crop). For their respective crop years to date, the US has sold 330 million bu of wheat (down 114 million), 2,384 million bu of corn (up 149 million), and 2,163 million bu of beans (down 72 million). We note that meal sales for the current marketing year were a negative 21,500 mt while new crop sales were a massive 500,000 mt. Unknown buyers showed up securing 280,000 mt of US soymeal.

• The allowing of the sale of E15 yearlong could boost US corn demand by 200-300 million bu, a help, but not a panacea of bullishness. The US corn farmer and US ethanol industry would applaud such a move, assuming it did not occur with the production of new RINs from biofuel exports.

• The Argentine Peso has continued its collapse with its trading at 40:1 or down 6 Pesos or 18% from the overnight trade. Argentine bankers are rumoured to be raising lending rates to Argentine farmers to 60-70% with some pulling their lending offers. The dramatic currency movement has caused cash grain trade to come to a halt as farmers really don’t know where the cash market is trading in Peso terms. The Brazilian Real has declined to 4.20:1 near the 2016 lows.

• ARC would remind that the USDA/WASDE will not update US wheat production estimates in its Sept 12 report. US spring and winter wheat production will be final with the September Stocks and Final US winter Seeding report in late September.

• The central US GFS weather forecast has a steady flow of rain that will be centered on the WC Midwest and the Great Lakes into Sept 12. The wet flow persists into the 10-15 day period, which could raise concern for early harvest. Flooding is likely with soils saturated from prior rains. Key will be whether the WC Midwest dries out in the last half of September. Accumulations through the 10-day period are estimated in a range of 2-5.00 plus inches. The heaviest totals will favour NE IA, MN and W WI. Temperatures stay near to above normal. Minimum lows into mid-Sep across the Northern US/Southern Canada will be in the 50’s to mid-40s. Any heat will be centered on the E Midwest with highs in the upper 80’s to mid 90’s.

• The Argentine Peso is in free fall with the Real/Ruble in tow. Inflation is raging in Turkey, Argentina and even Brazil. The Argentine grain market cannot deal with the extreme currency volatility as farmers are halting sales. If the Ruble falls fate to a sharp decline, the pressure will grow on the Russian Government to halt grain exports to slow its food inflation. Extreme currency volatility is not something world ag traders are used to. Volatile times appear to lie ahead.

• It has been a mostly green morning in Chicago with wheat pacing the rally on Russian rumours. Corn and soybean have tried to follow but left over old crop farm selling is capping the rally ahead of first notice day against Sept futures on Friday. The Chicago tone of the marketplace is different from prior sessions with traders expecting that seasonal lows are forming. Another run of fund buying is possible before the close tonight. US and world wheat futures are sharply higher as rumours abound on what the Russians will be doing to slow or halt its wheat exports in the weeks/months ahead. Meetings were held yesterday at a lower ag ministry level and will be held again at a higher level on Sept 3. The meeting yesterday was with Russian deputy ag ministers and politically influential livestock industry.

• The Russian Sept 3 meeting will be with grain exporters. The rumours have Russian ag ministers discussing that it will limit Russian total grain exports at 30 million mt, including 25 million of wheat. This compares to a WASDE forecast of 35 MMTs of 2018/19 wheat. The 10 million mt of reduced Russian wheat exports would be highly important with world wheat exporter stock/use ratios at a record low. The meeting elevates the potential for additional wheat futures market risk with the US on holiday on Monday. We estimate that Russia will have exported a record 8.1-8.4 million mt of wheat during the July/August period. We understand that brokerage firm FC Stone could be releasing their September Crop Estimate after the close on Thursday. Most other analytical firms will release production estimates next week. The USDA September Crop Report is out on the 12th.

• Weekly US ethanol production was 1,070 thousand barrels per day last week that produced 314.6 million gallons of ethanol. This compares to 315.5 million gallons in the week prior. US ethanol stocks fell to 968 million gallons vs 977 million last week which is up 8% from last year. US crude oil stocks remain depressed at 406 million barrels, down 11% from last year. It is this drop in US crude stocks which is likely to rally crude oil to $75-80.00 by the end of the year.

• Canada is suggesting that there could be deal with the US/Mexico by Friday. This would renew NAFTA type of agreement for another 6-7 years. The sticking point of huge Canada dairy subsidies/a closed market is being resolved.

• The central US GFS weather forecast is slightly farther south with heavy rains compared to the EU model overnight. A steady flow of moisture will be centered on the WC Midwest and the Great Lakes into Sep 10. The wet weather flow persists into the 10-15 day period which could raise concern for early harvest. Accumulations through the period in MO, IA, MN, WI and IL is estimated upwards of 2-5plus inches. The heaviest totals will favour MO, IA and WI. Localised flooding is likely. Temperatures stay near to above normal. Minimum lows into mid-Sep across the Northern US/Southern Canada will remain perched in the low/mid-40s. New heat will be centered on the E Midwest with highs in the 90’s.

• The bull story continues to build in wheat. There is too much smoke in Russia for their not to be a fire somewhere in terms of a grain trade restriction. The Stats Canada report is now key on Friday while the US/Mexico and likely Canadian trade deal helps the demand outlook for US ag products. Our view remains that seasonal lows are forming, and research argues that wheat will score new highs.

• Row crop markets are weaker this morning following stable/higher crop ratings Monday afternoon. Wheat has found some measure of stability ahead of Egypt’s tender results and amid similar price action in European futures. Egypt announced that it secured 350,000 mt of wheat for mid-October arrival. Few details are available, but the lowest reported offer was a cargo of Russian origin at $222/mt. This is rather aggressive given Russian quotes for October yesterday were pegged at $225. Egypt last bought wheat at $231/mt, basis fob, in mid-August. A purchase of Black Sea wheat is assured, but depending on tonnage today’s tender should offer lasting support to world wheat cash markets. Russia continues to dominate wheat trade, but this is speeding the process of exhausting its surplus. Russia has sold 1 million mt of wheat to Egypt so far in the marketing year, not including this morning’s purchase. Assuming much of this morning’s business was of Russian origin, this nearly matches the pace of last year, despite Russian wheat supplies declining 18.5 million mt.

• The US and China remain steadfast in their trade stances, and uncertainty remains over previously scheduled talks in November. Assuming Pro Farmer’s yield estimate, US soybean end stocks could balloon to 825-850 million bu, maybe more. Assuming trend yield in 2019, a 6-plus million decline in seeded acres is needed to pull 2019/20 end stocks below 600 million. US government aid is helpful, but a trade deal is needed to change the market from a structural bear.

• News on Canada joining the US and Mexico in a new NAFTA is variable, but the Canadian dollar this morning rests at a two-month high. The market is optimistic on North American trade.

• The midday GFS weather forecast in Australia features another meaningful rain event in far eastern NSW next week. This would further replenish soil moisture for spring crops. The EU model is largely dry, and so close attention will be paid to its next release this afternoon. Radar maps show widespread precipitation working across the E Plains, IA, MN and N IL. Soil moisture will be adequate for crop finishing, but perhaps too much rain will fall across the N Midwest over the next 8-10 days.

• The central US GFS weather forecast is little changed from previous runs. A steady flow of moisture will be centered on the NW Midwest and Great Lakes into Sep 6. Accumulation through the period in MO, IA, MN, WI and IL is estimated upwards of 2-5-plus inches. The heaviest totals will favor MO, IA and WI. Localised flooding is likely there into the weekend. Yet more rain is offered to the Western Corn Belt Sep 10-11, though confidence so far out is low. Temperatures stay near to above normal. Minimum lows into mid-Sep across the Northern US/Southern Canada will remain perched in the low/mid-40s.

• Corn and beans continue to reel from harvest pressure and liquidation of excess old crop supply. Soybeans remain a supply-driven bear, while work maintains a noticeable demand-driven recovery lies ahead in US grain prices. We estimate managed funds’ combined position in corn, wheat and soy at a net short 70,000 contracts, vs. a net long of 6,000 last Tuesday. Fund selling/liquidation will likely have run its course by mid-week.

• Low volume and mixed has been the signature of Chicago trade to end the week. Soybeans and corn have held in the green, while the wheat market is slightly lower following the weaker price trend evident in French wheat futures. Fresh news is lacking and with the summer row crop harvest dead ahead, few desire to add to their market risk ahead of the weekend. The weekly Commitment of Traders report is out after the close and traders are looking for the data to confirm that funds have cut their net long wheat position by 10-15,000 contracts, while adding to market shorts in corn and soybeans, and soyoil. The data and coming first notice day against September futures will keynote next week’s trade. Chicago brokers estimate that funds have bought 4,300 contracts of corn and 2,200 contracts of soybeans, while selling 1,900 contracts of wheat. September Chicago options expire today with few market fireworks expected.

• We note that two US soybean vessels are loading for China this week. The importer is said to be Sinograin and they are testing to see if CIQ will allow US soybeans to enter China. US monthly soybean exports have been record large since April, a trend that should persist during August. Large weekly soybean shipment data is expected on Monday.

• Pro Farmer will be releasing their US corn yield estimate at 1:30pm today.

• The US/China trade war is set to escalate after each side failed to score real progress after two days of talks. The Chinese are likely to wait until the November election to gauge how to push real trade progress. This means that 25% tariffs will be invoked on $200 billion bu goods of Chinese goods after Sept 6. China is expected to retaliate on US goods and its business practices.

• Russia will be surveying various sectors of their ag industries in the next few weeks to help the ag ministry decide on whether they should slow or shut down its wheat exports. It is calculated that Russia will have exported a record 8 million mt of wheat in July/August amid the EU crop shortfall. Russian livestock producers are lobbying strongly for a ban due to rapidly rising feed costs. The Russian livestock industry wields a big stick in politics, and most cash grain traders are not offering Russian fob wheat beyond October.

• The central US GFS weather forecast is similar to the overnight run as a series of storms are expected to impact MN/WI/IA/IL and MI. Cumulative rain will range from 1.25-4.50” with some localised totals exceeding 5.00” into Sept 3. The rain will accentuate flooding across Central WI and S MN. The wet weather could produce stalk rot in corn. Above normal temperatures will persist with highs ranging from the 80’s to the lower 90’s. Any real heat will be located over the Midwest and the S Plains. US crop maturity will be pushed amid the above normal warmth. There is no evidence of any cold air for the NC US that would pose a threat to crops. Regional flooding is the big risk for crops in coming weeks.

• There is not much interest in new positions as harvest looms and traders are trying to gauge the building of US export demand. Argentina is offering fob corn below the US through September, but October offers are becoming scarce. Surprisingly, US soybean export demand is record large (without China), but this trend can’t continue beyond September. Chicago is in the transition from a supply bull which peaked just before the August crop report to a demand led bull which is coming.

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Weekend summary 24 August 2018

• Fund selling amid the deepening US/China trade conflict and worry about the spread of African Swine Fever (ASF) across China has pressured Chicago corn, soy and wheat futures. The volume of Chicago trade has been active with more than 170,000 contracts of December corn, more than 65,000 contracts of November soybeans, and more than 60,000 contracts of December Chicago wheat changing hands. Chicago is becoming oversold and there could be a late day rally. US/China trade negotiations are ongoing, and progress is being completed. It is highly unlikely that this negotiating team will produce a deal. However, these low level trade teams is where the real work is accomplished for the “higher ups” later on. It is a step forward that the US/China are talking. We would caution about becoming bearish of corn or wheat with US export demand to expand amid tightening world supplies.

• Chicago brokers estimate that funds have sold 3,400 contracts of soybeans, 5,200 contracts of corn, and 2,000 contracts of wheat. In soy products, funds have sold 2,300 contracts of soymeal while being flat in soyoil.

• China announced its fourth case of African Swine Fever (AFS) overnight at a location that was 1,300 miles from the initial incident. The broadening area that the disease has been found has some wondering the percentage of the Chinese pig herd could be impacted. AFS is a nasty disease (some call it the ebola of pigs) that often produces death in some 2-10 days. There is no vaccine or antidote available. Traders are trying to assess how many Chinese pigs could be impacted into yearend. Some argue that if the Government does not immediately limit transit and take drastic measures, that it could impact 5- 20% of the Chinese pig herd, or as much as 25-105 million head.

• The central US GFS weather forecast is like the overnight run with a series of storms expected to impact MN/WI/IA/IL and MI. Rain totals with a Friday/weekend system look to range from 0.25-1.50” with like totals due mid next week. Drier and above normal temperatures follow thereafter as a high-pressure ridge builds northward across the Plains. Above normal temperatures will persist with highs ranging from the 80’s to the lower 90’s. Any real heat will be located over the SC Midwest and the S Plains. US crop maturity will be pushed amid the above normal warmth. There is no evidence of any cold air for the NC US that would pose a threat to crops.

• The week has featured a weaker Chicago as the market’s focus was shifted back to large US crops via the Pro Farmer Tour. New US/China tariffs have not helped the bulls However, world crop production outside the US continues to decline which will offer a big US export opportunity. Chicago corn/wheat has become technically oversold with a Friday bounce expected. Research call for a secondary seasonal low before early September. World wheat prices are not declining all that much. Downside price targets for Dec corn rest at $3.60.

• Chicago futures are mixed at midday with wheat values trying to post a modest recovery as French wheat futures bounce and US September wheat bounce off $5.20 chart-based support. Chicago corn and soybeans remain under pressure on fund selling and looming large US harvests. The tone of the marketplace remains heavy with first notice day against September futures looming for late next week. Seasonal bottoms are expected either right before or after first notice day as discounted Argentine corn export offers become scarce. Few traders desire to have too large of a net long or short position until more is known about US corn and soybean yields. The Pro Farmer Tour is not shedding much information on whether the September yields will be above or below August. Crop condition changes are often a better gauge for yield changes in September than the PF Tour.

• Chicago brokers estimate that funds have sold 4,800 contracts of soybeans and 5,900 contracts of corn. In wheat, funds have sold 3,200 contracts early this morning with buying of 2,700 contracts causing the midday bounce. In soy products, funds have sold 3,200 contracts of soyoil and 4,100 contracts of soymeal. There are rumors of frost damage to Argentine wheat. It did get cold overnight in BA and southern sections of La Pampa with lows in the mid 30’s to the lower 40′s. However, producer sources argue that any cold damage was only cosmetic as it did not get cold enough to impact yield. Lows would have to reach into the mid to upper 20’s for yield damage and there is no evidence of such cold over the next two weeks. It is our belief that the Argentine cold weather rumors as unfounded. On Friday, the USDA is said to unveil the details on the $12 billion Trump Tariff Farm Assistance Plan. According to sources, the plan is supposed to offer $1.65/bu to soybean farmers and $.01/bu for corn. No payments are mentioned to US wheat farmers. The soybean payment rate could still change, but it is soy farmers that will see most of the financial support. This news will disappoint grain farmers. No payment amounts have been rumored for livestock or dairy producers as of midday. US soybeans will have to be harvested for the payment to be made, which means that US farmers could go after the 2018 soybean crop first. US farmers could delay corn harvest amid the unexpectedly low $.01/bu payment.

• US weekly ethanol production was 1,073 thousand barrels/day vs. 1,072 thousand last week that produced 315.4 million gallons of ethanol for the week. US ethanol stocks rose to 977 million gallons, which is up 8% from last year. The data was mixed for corn with ethanol stock rises offsetting increased production.

• The central US GFS weather forecast is wetter across the Lake States with a series of storms expected to impact MN/WI and MI. Rain will decline going southward with limited totals over the S Midwest, Delta and the S/C Plains. Above normal temperatures will persist with highs ranging from the 80’s to the lower 90’s. Any intense heat will be located over the C/S Midwest and the Plains. The forecast is too wet over the Lake States, but otherwise Central US crop maturity will be pushed by above normal temperatures.

• Chicago wheat is trying to bounce, but with Russia exporting record weekly totals, rallies will be tepid. And with rains slated to drop across E Australia in coming days, we doubt a new bull leg is unfolding just yet. Corn and soybeans are declining on fund selling amid pending large US harvests. Pro Farmer continues to find solid US yield potential.

• The US$ resumed its rally against the Brazilian Real three weeks ago, and broke to a two year high on Tuesday. It’s been a mix of a healthy and growing US economy versus the usual political uncertainty in Brazil. Brazilian farmers have already benefitted from record basis (thanks to China), and are now reaping rewards from the strong US$. The Brazilian planting season is now just weeks away, but already it’s been expected that Brazilian farmers will increase their new crop soybean area by another 3-5%.

• Soybeans were traded lower overnight as Day one of the Pro Farmer crop tour confirmed large soybean counts in the states of OH and SD. November struggled to get back over unchanged early in the day session, and had slipped back below the 50-day moving average by the close. Funds were estimated sellers of 3,000 soybean contracts. Ahead of the morning open, the USDA’s FAS agency reported a new crop soymeal export sale that was worth 250,000 mt. Meal announcements are rare, but the loss of Argentine supplies continues to drive world trade to the US. Apr-Jun Argentine meal exports were the slowest since 2008, and ship lineup data shows that a historically slow pace has continued in July and August. July exports are estimated at just over 1.5 million mt and August is expected to be just under 2. It’s been a disappointing start to the week and follow through liquidation is expected to weigh on soybean prices at midweek. All eyes are on the crop tour yield figures on Thursday night, as well as trade negotiations with China.

• Corn futures fell 2 cents. December ended exactly at its 50-day moving average, and a close below this foreshadows a test of $3.65-3.70. Pro Farmer’s tour has so far reported yields in two states (SD, OH) and results there are rather close to NASS’s initial forecasts last week. Final US yield will likely be big. Otherwise the market still lacks major corn-specific news. There remains weakness in Brazil’s ethanol market, where seasonal weakness has been extended a few weeks beyond the last two years. Sugar is testing multi-year lows. US ethanol exports will be lacklustre into early Sep, and so US ethanol stocks will remain lofty. Note also that Brazil’s Real today fell to a new 17-month low. Safrinha corn area will expand. But in the near term it remains that elevated world grain demand will be funneled to the US. We maintain that intermediate lows will be scored between $3.65-3.70 basis Dec, and in the next two weeks. Brazilian and Black Sea corn is a full $.30-.50/bu above US Gulf corn. Funds are short an estimated 40,000 contracts.

• US and world wheat ended sharply lower again following statements from Russia’s Ag Minister indicating no curb in exports would occur in the near term. Reports from Russia remain uncertain, spring wheat harvest is ongoing, and so there’s no real supply tightness in the N Hemisphere as of now. We expect the market to reorganize the world trade matrix, rather than policy. Russia also aims to release 2 million mt of intervention wheat, but this will be done in more rural areas and this wheat is unlikely to be sold unless domestic prices rally further. Russia’s prices have surged since early summer, but note that on average, like many ag markets, lasting rallies begin after harvest. Our point is that Russia’s exportable capacity is still far from certain. Russian offers this evening rest at $229/mt for spot, vs. $232 Monday and $235 last week. World markets this week have moved together, and so US wheat exports will remain limited to traditional buyers. However, on the margin, major exporter stocks will be lowered again in the USDA’s Sep release. Coming Aussie rainfall looks to be just a short term event.

• Concrete evidence of a US-China trade deal is needed before the US soybean balance sheet is altered significantly. Still, rhetoric is improvement, meetings between lower level US/China officials are scheduled for Wednesday and Thursday, and there is talk of a meeting between Presidents in November.

• Soybeans rallied overnight on follow through technical buying, but gave back most of those gains through the day and ended just above unchanged. Midwest rains both over the weekend and forecast for this week, along with a drop in the wheat market weighed on the market at the start of the week. The weekly Crop Progress report showed national good/excellent crop ratings down 1% from last week at 65%. After falling 11% last week, ND marked another 8% decline this week, while SD and MN each fell 6%. The largest increase was in MI, where good/excellent ratings jumped 10%. The MO borders contain the poorest rated crop at 34%, and NE has the highest at 81%. National crop ratings are holding above both last year and the long term average, while crop condition yield model points to a Sep NASS yield estimate of 52 bushels/acre. Short and intermediate technical trends are still up, with initial support for November just below $8.90. The US yield debate, and upcoming talks with China, look to remain main price drivers.

• Corn futures were stuck between a plunging wheat market and a stronger soy complex. News from the Pro Farmer tour so far has been limited regional counts, and a close eye will be kept on daily yield estimates. The Pro Farmer’s tour has a relatively solid performance in estimating yield, which requires a string of reports much better than a year ago. Official crop ratings were down another 2% to 68% good/excellent. Nationwide, the crop is 44% dented, vs. 26% on average this week. Note that % mature will be reported next Monday. Other news is lacking. Black Sea feed wheat is unchanged at $205/mt. Black Sea barley is unchanged at $235-245/mt into Oct. Gulf corn this evening is offered at $177/mt. This is at parity with spot Argentina, but is otherwise by far the world’s cheapest feedgrain. The return of complete dryness is being watched in Ukraine. Price changes in corn will be rather dull into the second or third week of September. Dec futures seasonal low was likely scored in early August.

• US wheat futures fell sharply. This is partially due to a further parsing of Russian government comments, there will be no immediate cap on exports, and also partially due to renewed currency weakness. Non-US farmer profitability remains intact. However, a major re-shuffling of the world trade matrix needs to occur in 2018/19, and this problem isn’t being solved at current prices. In fact, ongoing aggressive spot Russian offers will only speed the rally in domestic bread prices there. The Australian weather forecast is slightly wetter in the driest areas of NSW and Queensland. However, coming moisture won’t at all solve longer term drought. Assuming the forecast verifies, Jul-Aug precipitation in NSW will remain historically low. Note too that overnight low temperatures will drop into the 30s in Argentina this week. Important this week will be whether weekly export sales match last week’s excellent 30 million bu. Gulf wheat is still offered above comparable Black Sea origin for Sep arrival, and so we doubt the lasting shift in demand has occurred just yet. But US wheat’s discount to EU origin is widening. Better demand is due by mid-autumn.