• Chicago values have rallied into mid-session as USDA Sec Perdue stated that the Trump Administration is looking for ways to boost US Biofuel demand including infrastructure. No exact timeframe for an announcement was offered. The early price slide was based on abundant world wheat supplies and the pricing of DP old crop corn contracts must be settled by Thursday’s close. Otherwise, the news grapevine is empty with traders discussing the latency of the 2019 US corn and soybean crop. Yet, no trader is willing to place a long bet until a frost event can be seen in the forecast.

• Measuring losses from any frost/freeze event is impossible and traders know that the September12 NASS crop report is starting point. Getting past the September USDA report is a must to measure how a cold weather event might impact 20198/20 US corn and soybean stocks.

• We look for a mixed settlement with corn finding support below $3.65 December while November soybeans have support under $8.50. World wheat fob prices are likely to forge their seasonal harvest lows in September. The charts are looking much better amid the morning formation of a reversal.

• Once a soybean plant begins the podding process (R3), it requires some 53-56 days to reach full maturity (R7-R8). This means that for the nearly 16 million acres of soybeans that are starting the podding process as of Sunday, they will require nearly 8 weeks to reach maturity. In other words, first frost/freeze dates will have to hold off until October 19-30^th. This would be 2-3 weeks later than normal across the N Plains and 1-2 weeks later than normal across the northern 1/3 of the Midwest. Yield and crop quality losses would be expected with normal frost dates including finding more chlorophyll in immature seeds that could cause discoloration of the seed’s oil. From the start of flowering, soybeans demand at least 72-79 days to reach maturity.

• The low-ball French wheat offer from LDC to GASC was likely to underscore where French wheat needs to be (outside of Algeria) to capture world demand. The 50,000mt sale indicates the competitive landscape that must occur for EU wheat against the Black Sea. Ukraine is likely to export near record amounts of corn/wheat in the 2019/20 crop year that will trim back Russian, US and Australian wheat/corn export demand. World wheat prices can enjoy a modest seasonal recovery as the Northern Hemisphere harvest ends, but the outlook is sideways to bearish amid 2019/20 world wheat demand that looks to be almost static vs. last year.

• Weekly US ethanol demand was 305 million gallons, up 4 million from last week, but 14 million gallons below last year. US ethanol stocks fell to 966 million gallons, down 15 Mil gallons from last year.

• The midday GFS weather forecast is wetter than the overnight run with nearly all Midwest areas seeing better rain chances. Following the heavy rain since mid-August, multiple days of sun is helpful. Warmer temperatures are desired, but frost/freeze remains absent into Sep 13.

• A seasonally cool temperature pattern lies ahead. Warmer temperatures evolve in the 11-15 day period following the exodus of the remains of hurricane Dorian to the east. There is no evidence of a frost/freeze risk for the Central US into mid-September. Yet, several isolated incidences of a frost are possible across the NW Canadian Prairies in early September, which is right on seasonal averages.

• The Stats Canada all wheat estimates of 31.25 million mt and the canola estimate of 18.45 million mt were below trade expectations. Oats and barley production were larger than expected.

• We maintain that some cold weather premium is needed in Chicago prices heading into late September. However, amid sluggish US export demand, we would see any frost/freeze rally as producing the next selling opportunity. The supply bull market should return briefly following the September USDA crop report.

• Ag markets are steady to lower at midday as cool Central US temperatures battle against falling world cash grain markets. Major exporting currencies are down sharply today, with the Argentine Peso at 56:1 and the Brazilian Real at 4.19:1, a level not seen since the middle of 2018. Brazil continues to struggle with its Federal Pension reform and a flood of dollars leaving the country. China’s Yuan also fell to a new 10-year low, and is now down 14% from the spring of 2018, prior to the beginning of the US-China trade war. Weakness in S American currencies is keeping corn fob offers there depressed.

• Concern over cool Plains/Great Lakes temperatures, and a lack needed GDD (growing degree days) accumulation, will persist until confirmation of a warmer temperature profile is available. Low pressure will be anchored aloft Southeastern Canada into late week. Morning lows across the Dakotas Thurs-Fri morning will drop into the mid/upper 40s. However, the upper air pattern next week is void of any major frost/freeze threat.

• Actual premium won’t be added until lows below 35 are included in near term operational model output. The market will view frost/freeze events as binary, either the growing season ends prematurely, or it doesn’t.

• Argentine cash corn basis is down slightly this week, with spot fob offers now the lowest since the middle part of 2017 at $144/mt. US Gulf corn for September shipment is quoted at $163/mt. Steep discounts to US origin are present in S America and the Black Sea into the very end of 2019. Weak world corn prices are signaling an abundance of supply in exportable positions.

• Egypt this morning was offered a sizeable 760,000mt of EU and Black Sea wheat. The cheapest offer made was French origin at $194/mt. Russian wheat follows at $200 /mt, which is comparable to $3.99, December KC, on a fob basis. However, when adding freight, US wheat remains non-competitive into North Africa and the mid-East. We note that Egypt’s last wheat purchase on Aug 15 was executed at $201/mt, basis fob. Today’s purchase price will be roughly $199-200/mt. The world wheat market remains flat.

• Yet, we would mention that European wheat futures are bottoming (in our opinion) right on schedule ahead of the September delivery period. It is just tough to be overly bearish grain prices at current values, with Dec corn at $3.60-3.70 having digested potential 2019/20 US end stocks of 1.9-2.2 billion bu.

• Chinese crush margins are rising on rising domestic soymeal values.

• The midday GFS weather forecast is drier than the morning run across the Plains and Midwest over the next 10 days. Following heavy rainfall in mid-August, multiple days of sunshine will be helpful. Warmer temperatures are desired, but frost/freeze remains absent into Sep 10.

• A rather variable temperature pattern lies ahead. Warmer temperatures evolve next week as strong high pressure aloft is re-established across the Plains and Southern Midwest. High temperatures next Tues-Sat will reach into the 70s and 80s. A second blast of cooler air occurs Sep 8-9, but low readings in the upper 30s and 40s will stay isolated to northern MN and southern Canada.

• Neither the bulls nor bears will hold much leverage into the Sep Crop report, or more likely until the Midwest harvest begins.

• Soybean futures pushed to new weekly highs after the open but were back to unchanged by midday. Late day selling put the market on the lows leaving futures down 4-5 cents. The weekly US Export Sales report was disappointing. Weekly exports of 1.2 million mt (both crop years combined) were the largest since February. However, sales for the week amounted to just 25,936 mt of old crop and 792,575 mt of new crop. Outstanding salesof 4 million mt are unchanged from last year and similar to the past 3 years. It is the lack of new crop sales that is hanging over the market. Total new crop sales of 5 million mt are the lowest since 2005/06 (13 years).  The trade anxiously awaits the national corn yield estimate from Pro Farmer. After which, the market attention will turn to the length of the 2019 growing season. We remain bearish on rallies back to $9.00 basis spot futures with soyoil to gain on soymeal into 2020 on strong palmoil prices.

• Dec Chicago corn ended unchanged amid limited fresh news. Pro Farmer’s official yield estimates will be released Friday. So far, route estimates suggest worst-case yield scenarios will be avoided barring an early frost, with solid yield potential intact across much of the Western Corn Belt. Export sales remain lacklustre and recall that 2018/19 exports were largely driven by shortages in S America. Without adverse S American weather this winter, competition for world trade continues into at least mid-2020.However, most important in the near term is the cooling of N American temperatures.  21 million corn acres across the Northern US had not reached dent as of last weekend. Cool temperatures over the next 10 days will keep corn’s push to maturity sluggish. The midday GFS features lows near freezing across parts of Saskatchewan in the 12-15 day period. A US frost won’t occur in the next two weeks, but the cool to cold trend is concerning. Breaks will struggle below $3.70 December, but rallies demand a Midwest frost/freeze threat.

• Chicago and KC wheat futures ended higher, with spot contracts leading the way ahead of the Sep delivery period. Research suggests that a lasting bottom is forming in Europe. Upside vigor through the autumn months will hinge upon Southern Hemisphere weather. As of now vegetation health maps show markedly better conditions in Eastern Australia and much of Argentina. Crop critical S Hemisphere weather lies just ahead. US wheat export sales through the week ending Aug 15 were a solid 22 million bu, vs. 17 million the prior week. Total 2019/20 export commitments sit at 383 million bu, up 69 million (22%) from mid-Aug a year ago. Traditional destinations have been active buyers of US HRW and HRS. We suspect this is due to spot prices being down $.90/bu from a year ago, basis Minneapolis, and $1.35/bu, basis KC. Yet, pace analysis suggests the USDA’s 975 million bu all wheat export forecast is accurate. A neutral outlook is advised. World cash markets are projected to creep slowly higher over time. US wheat is finding enough feed/export demand to support breaks below $4.60, basis Dec Chicago futures.

• It has been a mixed morning in Chicago with the grains weaker while soybeans are firm. Fund selling has slowed, but December corn fell below last week’s low at $3.68. Spot Chicago wheat appears to be targeting the top of a chart gap at $4.50 while the world wheat market struggles to find a bottom.

• World wheat traders fear that WASDE is once again overstating world wheat trade amid the cheapness of world corn and lack of feed wheat throughout the Black Sea. The Pro Farmer Tour is being watched, but the corn yield data from OH/IN did not show the disaster that some supply bulls have argued for.

• US crop maturity is a big deal, but traders are unwilling to place any bullish frost bets until there is a cold weather threat on the forecast maps.

• We look for a mixed close, but the downside potential in corn is becoming limited. Wheat values may still have 5-10 cents of downside price risk, but this no place to be turning bearish of Chicago grain or oilseed. Cold weather risks will escalate during beyond mid-September as the race to the end of the growing season begins in trying to better understand US production.

• Chicago brokers estimate that funds are net sellers of 1,300 contracts of wheat and 3,900 contracts of corn, while buying 2,500 contracts of soybeans. Funds have bought 1,800 contracts of soyoil while being flat in meal.

• US ethanol production reached 301 million gallons last week vs 307 million in the week prior. US ethanol stocks fell to 981 million gallons, unchanged from last year. US crude oil stocks were 438 million barrels, up 7% on the year. The weekly energy/ biofuel data is seen as neutral to slightly bearish. The sharp drop in US corn prices has not stimulated US ethanol production. The big problem facing US ethanol is oversupply in capacity which pressures margin.

• The Pro Farmer Crop Tour has pushed into IL and IA with the yield results awaited. Today’s additional rainfall across IL/MO/NE is aiding the yield outlook with some rains to leak into IL. The PF Tour is expected to release their US corn yield estimate on Thursday evening or Friday morning. The Tour has really helped define the degree that immaturity could become a yield issue should the 2019 Midwest growing season prematurely end.

• China has been active this morning booking 10-12 cargoes of Brazilian soybeans for October. FOB prices are rising and the Brazilian premium vs the US Gulf has reached close to $1.00 /bu. China is 50-60% booked on Oct crush.

• The midday GFS weather forecast is farther north with Midwest rain next week as a series of storm systems next week are projected to include a larger share of IL, MO and IN. The midday model has 1-2.00″ of rain across much of MO, the southern 2/3′s of IL and southern half of IN. Rains of 0.25-1.00″ are projected for the Upper Midwest and N Plains. The forecast has enough rain to limit any dry weather concern, but cool temperatures in the last week of August will slow crop maturity. The primary weather concern going forward is no longer rain, its crop maturity and the finish of the 2019 growing season.

• The downside price risk is limited in corn with values near last year’s Aug 22 price level. Different this year is the uncertainty surrounding US corn/soy production relative to maturity. Dec corn bottomed following the Sept crop report at $3.45. Prior to the report the low was $3.59. The point is that corn has a few cents of downside risk with Mother Nature in control of the upside. Soy pod counts are well down from last year, but will the plant be placing on more blooms/pods heading into September. And Chicago wheat is likely within 6-8 cents of a low. Our best guess is that there will be better days to make new sales as a Chicago bottom forms in late August.

• It has been a another mostly weak session in Chicago, with better than expected rains moving across E IA & W IL. This has pulled Dec corn down to last week’s low at $3.70. Nov beans are 7 cents off session highs. US and world wheat futures also continue to probe for elevated autumn export demand, which it seemingly has been unable to find.

• Spot Russian wheat fob offers have fallen to $191/mt, vs. $195 in early August and vs. $225/mt on this week a year ago. French cash wheat has found new seasonal lows at $186/mt. French wheat a year ago was trading at $245-250/mt. There are hints that export commitments in the EU and Black Sea are struggling as importers stay hand-to-mouth. The world wheat market has acted as a weight on US corn values.

• Radar maps show decently organized rainfall working across the western third of IL currently. This event was largely unexpected by EU and GFS model solutions released late Monday evening.

• Hourly rainfall maps show accumulation in the last 24 hours across E IA/WIL in a range of 0.25-1.50″. Additional light but widespread rain will linger across the E Plains and majority of the principle Corn Belt into Thursday. Yield risks persist, and the duration of the growing season is far from certain. But the market is trading recent and upcoming boosts in Eastern Midwest soil moisture.

• S American currencies continue to recover from last week’s collapse, with the US$ down slightly today. WTI crude is stable at $56/barrel. Ethanol production and blend margins are up slightly this week amid weakness in corn and ethanol values. Wednesday’s EIA report is expected to show a slight uptick in weekly production. US ethanol stocks, however, will remain perched near record highs at 1,000 million gallons.

• The only bright spot today has been in world vegetable oil markets, which are maintaining support amid developing dryness in Malaysia and Indonesia. Spot rapeseed futures in Europe are nearing contract highs at €380/mt ($420/mt) as rapeseed oil prices have reached new 21-month highs. Dryness in Southeast Asia will be watched closely amid slowing crush rates in China.

• Participants from the Pro Farmer Tour continue to find yield variability as the trek across toward the Central Midwest is generally finding solid potential in NE and very immature crops in IN.

• Warmth in September is desired across the Northern and Eastern Corn Belt. Sep temperature guidance is trending warmer, but the near-term forecast keeps temperatures at substantially below normal.

• The midday GFS weather forecast is much wetter in all but the Southern Plains over the next 10 days. Most important is that high pressure ridging relaxes its grip on the Plains and Midwest into August 30. This will allow for a steady stream of moisture to be funnelled across the heart of the US Ag Belt. The GFS forecast is also cooler than the morning run, with overnight lows to fall into the 40’s across ND, MN and WI Aug 30-31.

• Additional official Pro Farmer yields are awaited, but amid a wetter US forecast, follow-through buying needs a new supply fear to sustain rallies. This year only combine data will give the market a real sense of future yield changes.

• It has been a low volume morning with initial limited interest from fund traders. Chicago in the reopen, came under pressure, tried to bounce before more aggressive selling then pushing values down to new daily lows. Volume today is down some 15-25% from recent weeks.

• Chicago lacks any “upside spirit” with traders expecting that US corn and soybean crop ratings improve later this afternoon by 1-2% in the good/excellent category following last week’s rainfall. Chicago traders need to see a statistical reason that US corn/soybean yields are well below NASS to engender a late summer market bounce.

• The Pro Farmer Tour this morning indicated that Dakota crops are behind normal, but they are generally healthy depending on the length of the growing season.

• We would note that you cannot trade a frost/freeze risk until it shows up in the10-14 day forecast. The earliest that such concern could arrive is mid-September or about a month away. The market knows that crops are delayed in maturity, but it has no way of measuring what it might or might not mean to lost production or yield.

• Chicago brokers estimate that funds have sold 2,600 contracts of wheat, 3,200 contracts of corn, and 2,700 contracts of soybeans from the reopen. In soy products, funds have sold 3,100 contracts of soyoil and 1,100 contracts of soymeal. Funds are modest net Chicago sellers this morning, but the volume does not suggest any real passion by the bulls or the bears.

• US export inspections for the week ending August 15 were; 20.0 million bu of corn, 42.6 million bu of soybeans, and 18.0 million bu of wheat. China shipped out 20.3 million bu of soybeans or nearly half the US’s weekly total. China has some 103 million bu of us soybeans that are sold, but not shipped in an old crop position. US soybean weekly exports are expected to “stay bright” for a few more weeks as China adheres to its pledge to execute Government purchases of US soybeans. US vessel nominations to load out to China are staying strong.

• For their respective crop years to date, the US shipped out 200 million bu of wheat (up 40 million or 25% from last year), 1,817 million bu of corn (down 353 million or 16%), and 1,597 million bu of soybeans (down 409 million or 20%). The export pace heading into the end of the crop year smacks of a slowing trend for new crop amid cheaper S American, Black Sea and Romanian grain offers. The US is the most competitive in soybeans by a wide margin, yet it can only fill non-Chinese demand based on the prevailing US/China trade war.

• Black Sea wheat prices are sliding to start the week with values down $2-3 with offers at$192/mt for September and there being few bids.

• The GFS midday weather forecast is wetter across the southern half of the Midwest/Delta and drier across the N Plains and the NW Midwest than the overnight run. Some 1-3.00″ of rain is forecast to drop across the south of I-80 with 0.25-1.25″ of rain to the north. No extreme dryness or heat is foreseen for the Midwest or Northern Plains. Portions of Texas will be hot with highs ranging from the mid 90′s to the lower 100′s under a high-pressure ridge. This ridge retrogrades westward by next week allowing for mild temperatures and several rain chances. There is no evidence of any threatening cold weather into Sept 3. The Central US forecast is generally favourable into the US Labor Day holiday.

• Immature crops are the early theme of the Pro Farmer Crop Tour, but the market has no way of knowing whether a frost/freeze will be early, timely or delayed this autumn. Chicago will make maturity adjustments when frosty temperatures are seen on the forecast maps. Until then, Chicago will see improved yield/production potential amid the recent rain. It is all about getting confidence over 2019 US corn/soy yield potential which is likely to cause a range bound Chicago market into September.

• Reduced volume and technical healing is the tone in Chicago at noon. Following 3 days of active fund selling in corn, the market is trying to stabilise with funds again returning to sell the overnight bounce, but in reduced volume.

• Wheat and soybeans are sagging with spreading noted in KC/ Chicago wheat futures. The ag news surrounding grain trade is limited with the results of the GASC wheat tender awaited. We look for a mixed Chicago close going home with few wanting to push their bearish luck too far. The market is taking its pulse amid a host of geopolitical factors including US/ China trade that are on the horizon.

• Chicago brokers report that funds have sold 1,600 contracts of wheat and 3,400 contracts of corn, while buying 3,200 contacts of corn. In soy products, funds are selling 1,900 contracts of soymeal while buying 1,200 soyoil. Spreading of oil/meal and KC/Chicago wheat is noted. Cash connected traders point out that cash DP corn/soy contracts (delayed price contracts) come due at the end of August.

• US weekly export sales for the week ending August 8 were mixed. The US sold 17.0 million bu of wheat (better), 14.3 million bu of corn (worse), and 26 million bu of soybeans. The corn and soybean sales include the old/new crop. China canceled over 400,000 old crop soybean sales that were shifted to new crop. China has 103 million bu of old crop soybeans left to ship and increasingly we look for at least half of these sales to be rolled forward to new crop.

• We also note that China secured 10.2 mt of US pork. The sale could have occurred right on the date that China halted purchases of US ag goods, August 2, but the demand is interesting. In the weeks ahead it will be key to monitor whether China secures additional US pork or any red meats. China pork prices are exploding to the upside with values said to be rising daily on supply shortages.

• US grain/soy sales for their respective crop years to date stand at; 362 million bu of wheat (up 56 million or 18%), 1,968 million bu of corn (down 400 million or 17%), and 1,788 million bu of soybeans (down 365 million or 17%). US soybeans are now priced $0.79/bu under Brazilian offers and US soybean demand should start to improve to non-Chinese destinations.

• The value of the Argentine Peso has improved slightly to 58:1 US$ while the Real stands at 4:1. Argentina farmers have slowed their selling of stored grains amid the currency uncertainty. The coming October Argentine Presidential election will loom large for the Peso in the weeks ahead.

• The midday GFS weather forecast is drier from the overnight run with tropical moisture reduced from the Gulf, which diminishes the rain chances for the E Midwest in the 5-10 day period. The Delta and much of the Gulf Coast has rain totals reduced by 1-2.00″ as a tropical system does not push northward. The models are struggling with Gulf tropical activity. E Midwest rainfall chances hinge on a weekend storm system that looks to produce 0.25-1.50″ across MO, IL and portions of IN. The rains would be a help to E Midwest summer row crops. A drier trend develops thereafter with the next meaningful rain chance not until the 11-15 day period. Tropical storm activity across the Gulf reduces our confidence in the forecast and attention should be paid to the 5-day forecasts.

• The markets are seeing new fund selling as spot corn futures drop below $3.60. Soybeans are leading the decline today as China secures additional Brazilian soybeans for October. KC wheat is likely forming its seasonal bottom and a higher close in corn would signify that this break has reached fundamental support. This is no place to turn bearish and we recommend awaiting US crop size clarification.

• Macro market selling has pressured Chicago row crop values this morning as the US DOW falls over 600 points amid the fear of a world economic slowdown. Germany, the strongest economy in the EU is no longer growing and China’s growth is fading. The worry is that the world’s economic cold could be pushed into the US which results in reduced raw material demand. The numerous geopolitical flash points and now economic slowing has acted to cap the overnight Chicago rally.

• Chicago brokers reportthat funds have sold 12,000 contracts of December corn and 6,500 contracts of soybeans, while buying 1,900 contracts of wheat. In soy products, funds have sold 1,600 contracts of soymeal while buying 2,500 contracts of soyoil. Funds are now entering a net short corn position with their selling active in the morning trade. We note that several large funds do not trade in the overnight session, and only position during the day session.

• The Argentine Peso is trading at 59.50 vs 1 US$ this morning, down another 4%. The Brazilian Real is weaker at 4 :1 while the Russian Ruble has fallen to 66 :1. The strength in the US$ heading into Russian winter wheat seeding and S American production cycles will spur additional grain production in 2020. The US$ is a safe haven investment in times of economic adversity. The greenback should continue to rally amid the outlook for US economic strength. The Chinese Yuan is priced at 7.025, their best levels in a year.

• US weekly ethanol production rose slightly to 1,045,000 barrels/day, up 5,000 barrels from last week. This will produce 306 million gallons of ethanol vs 307 million last year. US ethanol stocks rose to 1,003 million gallons, up 4% from last year. US crude oil stocks rose to 440 million barrels, up 6% on last year.

• US corn is priced well above other world origins, while the spread between US 12.5% HRW wheat vs Russian offers is narrowing. Russian 12.5% wheat is trading at $194/mt this morning vs US HRW Gulf wheat at $204/mt. Russian wheat is always 1% less on protein than what is stated, but the point is that the fob vs fob spread is the tightest since early spring. Although we do not expect any new N African or Mediterranean wheat demand to be filled by the US anytime soon, the fall in US KC wheat values is nearing levels that should be underpinned at $3.75 basis September futures amid a trend of rising Black Sea wheat values during September and October. US soybeans are the cheapest in the world by $0.75 vs Brazilian September offers. All non-Chinese import demand will be shifted to the US on price.

• The midday GFS weather forecast is wetter from the overnight run for the next 10 days with showers/storms focused across the Central Midwest through the weekend. Then, a series of short waves will produce showers across the E Midwest on each day next week. The rains would be a big help to E Midwest summer row crops that are in need rain. The wet weather trend persists during the 11-15 day period, and a good finish to the month.

• Tropical storm activity is evident across the Gulf, which reduces our confidence in the GFS forecast. However, there is no lasting extreme heat and the coming rain would be ideal for the blooming/podding soy crop. 2019 Midwest crops were late seeded which means that mid and late August weather matters.

• Funds are selling Chicago corn /soy for chart based reasons amid the weakness in US financial markets. December corn is within cents of our downside price target of $3.65-3.70. End user pricing has been less than expected on the decline as they already have hefty forward coverage. Wheat should be the first Chicago grain to bottom as harvest is completed, but much uncertainty remains for 2019 US corn/soy yields. US weeklyexport sales are out Thursday morning.

• The August USDA Crop report was bearish corn with soybeans and wheat caught up in its bearish undertow. US farmers are likely to start more aggressively shedding old crop stocks ahead of the new crop harvest. The report was a sizeable step in confirming that annual highs were likely scored in June with fund long liquidation in corn likely to accelerate. The next potential upside surprise comes with the September report and objective measurements of the US corn and soy crop sizes.

• NASS forecast 2019 US corn planted acres at 90 million (down 1.7 million acres from June, but still 2 million acres above expectations) with harvested acres pegged at 82.0 million. There is still the potential for US corn acres to decline farther in the October and final estimate, but the market’s focus now shifts totally to yield. That debate will heat up closer to harvest.

• NASS forecast ‘19 US soy planted acres at 76.7 million acres, down 4.3 million from expectations. Such US soy seedings are the lowest since 2007. US soybean seeding is the lowest since 2007 when the US farmer seeded just 64.7 million acres. The US seedings fall is bullish of soybeans via supplies.

•  NASS forecast US ’19 corn yield at a lofty 169.5 bushels/acre, up 3.5 from July based on farmer surveys and satellite data. This yield would be just 7 bushels/acre below trend with the IL corn yield at 181 bushels/acre, IA at 191 bushels/acre and IN at 166 bushels/acre. We would argue that this yield appears at least 3-5 bushels/acre too high, but based on US planted/harvested acres, a US corn yield less than 155 bushels/acre is needed to spark a run at the June highs. Amid the better corn crops in the Plains and the W Midwest, reaching such a low US crop yield is a “stretch” today.

• The US August soybean yield at 48.5 bushels/acre is right at the July WASDE forecast and like corn, is likely too high amid unfavourable August weather. However, adjustments will only be made when actual harvest data is available from the field in late September. We see the US final soybean yield at 46.5-48 bushels/acre.

• WASDE forecast 2018/19 corn end stocks at 2,360 million bu, an increase of 20 million with 2019/20 corn stocks at 2,181 million bu, and increase of 171 million, down only 179 million bu from the current crop year. WASDE lowered its US corn 2019/20 average price to $3.60, down $0.10 from this year. We would argue that WASDE is still too high by 150-200 million bu with US 2019/20 corn exports based on prevailing world stocks and fob price offers. December Chicago corn has downside price risk to $3.70-3.80 for a short term bottom with higher prices thereafter depending on yield results and the length of the growing season.

• US 2018/19 soybean end stocks were raised to 1,070 million bu, up 20 million as the US crush rate was lowered. US new crop soybean stocks were forecast at 755 million bu, which was down 140 million bu from July. We note that US ’19 total soy demand was lowered 104 million bu due to a 100 million bu decline in exports. China’s old crop imports were cut to 83 million mt with new crop at 85 million. Research argues for deeper cut in 2019/20 China soybean imports to 80 million mt or less amid the expansion of ASF and their reduced feed demand.

• US 2019/20 wheat end stocks were raised 14 million bu to 1,014 million bu with the average cash price lowered to $5.00. US 2019 all wheat production was raised 59 million bu to 1,980 million bu. Research argues that US 2019/20 wheat exports are overstated by 50 million bu due to acute competition in world wheat trade. US 2019/20 wheat end stocks are likely to remain between 1,050-1,100 million bu. Chicago rallies will struggle, and we see no real demand story for US wheat into 2020.

• WASDE forecast 2019/20 world wheat stocks at a record large 285.5 million mt with a Russian wheat crop of 73 million mt and European harvest of 150 million mt. World wheat trade was reduced to 182.6 million mt amid slowing world GDP rates.

• WASDE forecast 2019/20 world corn stocks at 307.7 million mt, down 20 million from last year amid a 16 million mt decline in Chinese corn stocks.

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Weekend summary 9 August 2019

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Fund positions disaggregated data