• Chicago higher at midday on a lack of sellers; December corn futures above 20-day moving average; Mississippi River getting historically low.

• Soybeans pull back on S American hedge pressure/EIA June soyoil use record large and second biggest for any month; June UCO biofuel use record large as US renewable diesel capacity expands. Midday Chicago futures are mostly higher at midday with soyoil in the red amid the sharp fall in crude oil futures.  Corn/wheat markets have seen managed money short cover with the Algo/AI systems noting positive seasonal price trends in early September. Speculative traders want to cut their market risk heading into the September NASS/WASDE report in 8 trading sessions. December corn futures have pushed above the 20-day moving average for the first time since July 24. And US wheat futures have put in their best week in over a month. Sell orders are more difficult to find with farm sales well down from the past month. We look for a higher close with the market’s focus to shift to private crop estimates early next week.

• Chicago brokers estimate that funds have bought 4,200 contracts of corn, 1,300 contracts of wheat and 2,100 contracts of soybeans. Fund were sizeable buyers of soybeans overnight but were sellers on the morning price decline. In the products, funds have been sold 2,100 contracts of soymeal and 3,200 contracts of soyoil.

• The USDA/FAS reported the sale of 132,000 mt of soybeans to China in 2024/25 and 100,000 mt of soymeal to Columbia. It is suspected that US soymeal processors or exporters are willing to discount US soymeal for export to lock down positive crush margins.

• Mississippi River flow levels continue to drop with barge operators noting that sandbar delays are becoming numerous. The Mississippi River is expected to stay in decline which will cut drafts and raise barge transit costs. The only good news is that rain is expected to arrive in the Delta which may help to limit southern seasonal river flow declines. However, it is upriver in the Ohio or Missouri River Basins where the rains are most needed to boost flows. For the past 3 years, US agriculture has been fighting low water levels and falling interior basis costs on barge rates. US farmers are preparing for weakening basis bids due to surging barge costs. This provides economic advantages to local biofuel, feed producers and soybean crushers.

• Two new tropical storms are forming in the Atlantic that could become hurricanes. The first storm is forecast to take a more southerly track and targets the Florida Panhandle while the second system is too far out in the forecast to provide pathway direction. With the corn/soybean harvest underway across the Delta and the Gulf States, traders will be following these systems closely over the holiday weekend. The Atlantic is becoming active and close attention should be paid to tropical storm development and direction.

• The midday GFS weather forecast is wetter than the overnight solution. The model is dry in the 1-6-day period but breaks out better rain beyond September 6th as a warm front sweeps northward. The rains are focused on the E Midwest with reduced totals across the Gulf States. No extreme heat is foreseen beyond today. Our confidence in the GFS forecast is in decline due to the potential formation of tropical storms. Our forecast bias is to the EU model which offers an extended period of Midwest dry weather.

• Chicago ran out of sellers as September liquidation ended. Funds are coming out of long equity/short commodity positions. It is a new growing season for S America/Australia and new winter wheat crops being seeded in the Black Sea and SW Russia. We would not chase rallies with private US corn/soybean yield estimates to be record large. And Brazilian farmers are finally parting with stored corn/soybeans which is being hedged in Chicago. We would argue that seasonal grain lows have formed, but a sustained rally depends on improving US export demand or lower US crop yields. A decline in the US corn yield is more likely that soybeans following the recent Midwest rains.

To download our weekly update as a PDF file please click on the link below:

Weekend Summary 30 August 2024

• Chicago rallies on Central US weather forecast, End of the September liquidation; Seasonal discussion on Chicago lows.

• Chicago futures bounce on diminished Sept liquidation amid long US holiday weekend; Chicago futures are bouncing higher with corn, soybeans, and wheat trading in the green. Wheat has been a reluctant follower. The volume of midday trade is in decline with traders preparing for a 3-day holiday weekend. US farmers report that crop maturity is pushed amid this week’s heat and the fall in soil moisture. US good/excellent crop ratings are forecast to decline on Tuesday by 1-2% with farmers/crop scouts reporting corn foliar disease on the rise. Short covering into the week is forecast with the USDA September 12 report due out in 9 trading sessions. Most traders agree that the top end of crops has been taken off via recent heat/dryness, the more difficult question is what the starting point for yield was.

• Chicago brokers report that the managed money has bought 3,200 contracts of corn, 4,200 contracts of soybeans, while being flat in wheat. In the soy products, funds have bought 4,300 contracts of soyoil and 1,700 contracts of soyoil.

• The USDA reported that US exporters reported the sale of 118,000 mt of US sorghum sales to China. This may be old business that is now being announced due to China’s slowing of sorghum/barley imports into late October.

• US weekly export sales of US corn, soybeans and wheat were larger than expected. For the week ending August 22, the US sold 19.6 million bu of wheat, 90.8 million bu of soybeans, and 59 million bu of corn. The soybean sales were the largest weekly total in nearly a year. US crop year wheat sales are up 90 million bu at 365.5 million while the US has now sold 373 million bu of new crop soybeans and 371 million bu of new crop corn. This was another good week of sales as US export demand is improving. However, Brazil did sell few leftover cargoes of old crop soybeans to China for September this morning.

• Chicago September deliveries are not expected to be heavy in corn, soybeans, or soymeal on wide spreads. The Sept/December corn spread went out to $0.25/bu December premium, which more than pays for storage/interest and provides a 5.5% return. Outside of the soy product premium spreads, it is not expected that there will be large September deliveries. Current registrations are 424 contracts of wheat, 6 oats, 15 corn, 10 contracts of soybeans, and 415 contracts of soyoil. No soymeal or KC wheat is registered for delivery.

• A new tropical system is forming in the Atlantic and the September outlook is for growing storm activity. The Mississippi River continues to retreat and barge rates are likely to rise as draft levels decline and sandbars emerge as water levels push lower. The latest weekly drought monitor reflects how quickly the Central US is drying down. The coming first half of September is forecast to be arid across the Midwest which accelerates soil moisture losses. A Gulf hurricane will be required to restore Mississippi water levels.

• The European Commission lowered their soft wheat production forecast to 116.1 million mt (including durum) would place the EU all wheat crop at 123.5-124.5 million mt. EU corn production was trimmed to 61.6 million mt. The smaller EU grain crops will limit their export capacity due to wheat quality also being severely impacted.

• The midday GFS weather forecast is wetter than the overnight solution with showers to push across the Central US in the next 24-36 hours with rainfall totals of 0.1-1.50” with the best totals across Iowa. Dry weather follows, but the GFS forecast is noting tropical storm activity in the Gulf which makes any forecast beyond the next 10 days difficult. Our bias is to the EU model which offers an extended period of Midwest dry weather.

• Chicago ran out of sellers as September liquidation ended. Funds are coming out of long equity/short commodity positions at the end of the month. In September, it is a new growing season for S America, Australia with new winter wheat crops being seeded in the Black Sea and SW Russia. China’s announcing a sorghum purchase could be related to the production of alcohol for human consumption, not for feed. The Chinese Government request was to slow feed sorghum imports. Our view is that seasonal Chicago lows are forming.

• Stats Canada wheat/oats crop size supportive; China says to slow sorghum/barley imports into corn harvest; GFS weather forecast slightly drier at midday.

• Firm interior Russian cash price rallies wheat futures: Chicago grain futures are mixed at midday with wheat futures higher, soybean futures lower while corn trades either side of unchanged. Wheat is higher on rising interior cash bids while better than expected rain across Northern and Central IL (along with the prospect of showers into Friday) pressured Chicago soybean futures. Corn has followed soy amid the news that China will delay its purchase and import plans of barley/sorghum until its farmers are done with their autumn harvest.

• China alerted the feedgrain market last spring that their imports would be in seasonal decline into harvest. China (like Turkey/India) is trying to support domestic cash oilseed/grain prices to boost farm income. The fall in farm income is a global problem, not domiciled on US farmers. In fact, Brazilian farmers are entering their new soy planting season with losses for the first time since 2008/09 which will tap down on spring seeding expansion. Brazilian farmers will plant first season corn on reduced acres that meets domestic demand. Look for a mixed Chicago close with liquidation ongoing on September futures. There are 424 contracts of Chicago wheat, 6 contracts of oats, 15 contracts of corn, 10 contracts of soybeans, 415 contracts of soyoil, and zero soymeal that are registered for delivery on Friday.

• Chicago brokers estimate that the managed money has bought 3,700 contracts of wheat and 2,900 contracts of corn, while selling 1,200 contracts of soybeans. In the soy products, funds have bought 2,300 contracts of soyoil and sold 2,100 contracts of soymeal.

• Stats Canada pegged their total 2024 wheat crop at 34.4 million mt, up 1.3 million from last year with the gain coming in durum wheat. The 2024 Canadian durum wheat crop was up 1.93 million mt or 47% to 6.022 million mt. Canadian spring wheat production fell 2.5% or 200,000 mt. Stats Canada estimated the 2023 all Canadian wheat crop at 32.9 million mt, 1 million more than WASDE. We are unsure whether WASDE will follow Stats Canada in raising old crop Canadian wheat production. 2024 Canadian canola production was estimated at 19.5 million mt, up 300,000 mt more than last year. Oat production was placed at 2.91 million mt, up far less than expected a gain of only 260,000 mt from last year. The Canadian oat/wheat data was bullish, with canola neutral to slightly negative vs expectations.

• The USDA reported that 264,000 mt of US soybeans were sold to China, 100,000 mt of corn to Columbia and 165,735 mt of corn to Mexico. There are rumours that China has secured an additional 3-5 cargoes of US soybeans this morning.

• US weekly ethanol production was 315 million gallons, up 6% on last year and a record for the week. US ethanol stocks were steady at 990 million gallons. We would argue that the WASDE 2023/24 corn grind for ethanol is too low by 15-20 million bu and that an upwards adjustment will be made in September.

• The midday GFS weather forecast is drier than the overnight solution with light rain to linger across MO, IA, and IL with totals of 0.1-.7”.

• The forecast beyond Friday looks arid with limited rain and warming temperatures. The 11-15-day maintains this drier trend. Thus, it is important as to the locations and amounts of rain that drop in the next 60 hours. If you miss this rain, a drier slate is ahead that lasts for the next few weeks. Temperatures stay elevated for a few more days before turning more seasonal on Friday and the weekend.

• September corn futures are under liquidation pressure that will cease on Thursday ahead of first notice day. Soy futures are in decline on the prospect of Midwest rain over the next 2 days before an extended dry period of weather. Reports of IL/IN/OH and IA corn foliar diseases are becoming increasingly widespread. China slows feed grain imports into late October, but they are expected to import 23 million mt of world corn in 2024/25, it is just a question of from the US or S America.  Russian interior wheat prices appear to have bottomed, and exporters are chasing cash prices higher making replacement more costly. Corn and wheat will continue to outperform sagging soy.

• Chicago higher at midday; Mexico buys US corn; GFS weather forecast drier in 6-10-day period.

• Global markets higher; Wheat leads the way at time of normal seasonal bottoms: Chicago grain futures are higher at midday by varying degrees, with US wheat futures up 9-14 cents, corn up 4-6 and soybeans up 3-5. We would suggest that it is the cleaning of September futures positions that dominates intraday moves into Friday, and key is whether liquidation implies a shedding of short positions or market length. Chicago wheat is working on a key reversal, while similar action is noted in European corn and rapeseed markets. We would reiterate that bottoms in US/Paris wheat futures very often surround September expiration.

• Other breaking news is lacking. War rages in eastern Ukraine with reports that Ukraine’s military attempted to break through into the Bolgorod region, which follows the recent volley of strikes from the two sides since early August. There has been no disruption to grain flows, but geopolitical risk is certainly higher than zero. We also note that importers have been relatively active. Jordan this morning successfully purchased 60,000 mt of wheat. Algeria is seeking 120,000 mt of corn. South Korea announced a purchase of 68,000 mt of S American origin corn.

• Summer without glaring Central US weather threats is typically defined by the shedding of risk premium, which gets compounded by newly harvested wheat supply in importing countries and the arrival of S America’s corn surplus in Jun/Jul. It is September that usually marks a shift in focus to disappearance, and we believe it is now clear the US corn market has found demand growth, and that Chinese pricing of US soy origin soy will be active at least through early winter.

• US exporters sold 128,000 mt of corn to Mexico. New crop US corn sales to Mexico on Aug 15 totalled 176 million bu, up 12 million on the previous year, and Mexico will again secure 22-23 million mt of US corn in crop year 2024/25.

• We also continue to highlight the complete lack of rainfall forecast in E Europe, Ukraine, and Southern Russia through the first full week of September, while temperatures in the Black Sea region stay 7-13 degrees above normal. USDA in its weekly update pegged moisture is insufficient in large swaths of winter crop producing areas of E Ukraine and SW Russia. Autumn weather correlates poorly with production but does mandate a wetter than normal winter to replenish moisture reserves. 30-day climate guidance keeps this pattern of warmth/dryness intact across the Black Sea into late Sep.

• The spot cash Indian wheat market is up another $0.02/Bu at $8.94. Wheat prices in India have only been higher briefly during Russia’s initial invasion of Ukraine. Expect end users to continue to pressure the government to release reserve stocks.

• The GFS weather forecast at midday is drier than the morning solution, with moderate rainfall no longer forecast across MO, IA and IL Sep 5-7. Instead, rainfall stays confined to TX and the Gulf region, while net soil moisture loss elsewhere gets accelerated amid this week’s warmth. A few spotty showers are possible in the Upper Great Lakes and far Eastern Midwest in the next 72 hours, but nothing heavy is indicated. Max temperatures this afternoon are projected in the 90s across the E Plains, Midwest, and Delta/Southeast. Heat is forced eastward by late week. Highs in the upper 80s/90s linger across the southern Midwest and mid-South into Friday.

• A series of chart-based resistance levels lie ahead of the market, but there is more uncertainty over the details of US corn/soy yields amid regional dryness in August, late summer heat, and the potential for a lack of precipitation to be extended into mid-Sep. Our bet is that markets continue their chop this week, but that bearish enthusiasm wanes as the calendar turns to September.

• Chicago mixed at midday, soyoil rises on bullish chart development; GFS weather forecast drier/warmer on midday run.

• Chicago grain futures are weaker on chart related selling and news that the Teamsters Union served the CN railroad with a 72-hour strike notice as the work stoppage on Canadian rail line is ongoing. The notice says that none of the labour issues are insurmountable and is open to further negotiations. The Union is challenging the binding arbitration call from Labor Sec Mackinnon.

• US wheat futures resumed their decline amid the wrinkle in the reopening of Canadian railroads, which then set a negative tone in corn. We assume that Canadian courts will become involved in the newly announced strike and the need to return Canadian rail lines to full operations. The legal complexity of the Canadian rail strike now makes it difficult to know when service will resume. It is expected that the Canadian government may sue the Teamster Union to force members back to work.

• Chicago brokers estimate that the managed money has sold 2,800 contracts of wheat and 3,200 contracts of corn, while buying 2,900 contracts of soybeans. In the products, managed money has sold 3,100 contracts of soymeal and bought 3,600 contracts of soyoil.

• The USDA also announced the daily sale of 120,000 mt of US soybeans to an unknown destination, presumably China. There is talk that China has secured an additional 3-5 cargoes of US soybeans for November today.

• Pro Farmer is expected to release their 2024 US corn yield estimate later today following this week’s crop tour. Pro Farmer does not peg US soybean yield due to the importance of weather and growing conditions over the next 3-5 weeks. Early soybean harvest is underway in the Delta with yield reports varying widely depending on late season rainfall. The US corn harvest has pushed into Kentucky and Southern Missouri with yield reports being equal to or slightly above last year.

• The midday GFS weather forecast is drier with less rain/more heat than in the overnight run. Whether or not this run is better than recent wetter forecasts is unknown. Unfortunately, the GFS forecast appears to be struggling with the week 2 forecast. Nearby, warm, and dry weather is forecast across the Central US. Heat and dryness will cause US crop conditions to decline next week. Rain needs to return in early September to boost soybean seed size. Central US weather matters for US corn/soybean yields for another 2-3 weeks.

• Soyoil charts are turning upwards with the push above Thursday’s high and the 20-day moving average basis December futures at $0.4025. The last time that soyoil closed above its 20-day moving average was back in mid-July.  Corn and wheat futures are lower on the Canadian rail uncertainty and fear that Pro Farmer will release a corn yield that is above the August NASS estimate of 183.1 bushels/acre. Central US weather forecasts are drier than desired with rain needed next week.

To download our weekly update as a PDF file please click on the link below:

Weekend Summary 23 August 2024

• Chicago sinks with wheat forging new contract low on Canadian rail lockout; Pro Farmer soybean pod counts larger than expected; GFS weather forecast wetter at midday.

• Canadian panic. News that Canadian Railways locked out their workers this morning caused a panic of sorts on the Chicago markets. The lock out caused Canadian grain elevators to either stop taking grain or they dropped their cash basis bids sharply to reflect the rail strike. Some basis declines were as much as 10-40% of the value of the commodity. The uncertainty of when the Canadian rail lock out would be resolved just as the harvest is starting produced storage fears. And that the Canadian grain industry would truck supplies to their nearest customer, the US. This produced a sharp decline in US wheat futures to new contract lows while a rally in soyoil also ran into resistance on a Canadian canola import onslaught. Chicago values fell sharply on the worry that the US would see two harvests, one from the US and the other from Canadian farmers that would truck their grain southward.

• The problem in moving Canadian grain southward is truck availability and cost. Not only is Canadian agriculture looking for ways to move grain south, so are a host of other industries looking at the same option. The cost of short hauls to the US is rocketing higher as Canadian’s look for transport to get their goods to customers. Amid dramatic non-rail transit demand, there are not enough trucks to move more than a trickle of Canadian grain south to the US. But in futures trading, the theme is “shoot and ask questions later”. Such was the selling in Chicago wheat futures this morning.

• Amid the economic importance of two Canadian railways to the Canadian/US economy, it is unlikely that the strike will last more than a week. Canadian farmers have enough storage for at least 10 days of harvest, but the railway lockout has all Canadian farmers on edge. Chicago will follow labour negotiations closely as will the financial markets in terms of inflationary wage pressure signals.

• Chicago brokers estimate that the managed money has sold 5,400 contracts of wheat, 6,800 contracts of soybeans, and 4,600 contracts of corn. In the soy products, managed money has sold 2,500 contracts of soymeal and a net 2,200 contracts of soyoil.

• FAS/USDA announced that for the week ending August 15, the US sold 18.1 million bu of wheat, 55.5 million bu of corn (both crop years), and 60 million bu of soybeans in (both crop years). There was 1.6 million bu of old crop soybeans that were cancelled with new crop sales of 61.6 million bu. There was a net 116,400 mt of US soymeal sold (both crop years) and 10,500 mt of old crop soyoil. The sales of US soybeans/wheat were better than expected.

• The USDA also announced the daily sale of 198,000 mt of US soybeans to China, 105,000 mt of US soymeal to Vietnam, 110,490 mt of corn to Mexico, and 132,000 mt of US corn to an unknown destination. China has now secured an estimated 4-4.5 million mt of US soybeans in a known and unknown category. There is talk that China will be seeking world corn when their corn harvest starts.

• Ukraine has hit a train ferry of fuel tanks in the KavKaz port in Krasnodar, Russia. KavKaz is the main port for taking supplies and people to Crimea. Rumours have the missile attack causing several ships to sink which may be blocking the port. The port also exports grain, but increasingly it appears that Ukraine is targeting Russian infrastructure which may include the Kerch Bridge. Ukraine’s intrusion and capture of Russian land has been a success, but the war stakes have been increased for Black Sea cash grain trading.

• Pro Farmer soybean pod counts and the Canadian Railway lockout has sparked renewed selling across Chicago. The push to new wheat lows comes as a surprise as the Russian/Ukraine war targets infrastructure, which includes key bridges and ports. Yet, the war has not produced a lasting rally since June of 2022 and traders are fully aware of the prospect of slowing sales/trade from the region. The easy money in being a bear has been made, and although November soybeans could retest $9.50 or December corn $3.90, the downside risk is not sizeable. That said, a rally does not commence until it is known how big is big in terms of US corn/soybean yields. The Pro Farmer tour hinted that 183 bushels/acre may be enough in corn, but soybean pod counts argue for a larger US yield in September.

• US wheat follows Paris weakness; Mississippi river level in seasonal decline; Weekly US ethanol production record large for August.

• Chicago markets are choppy and dull at midday. Pro Farmer Tour results have failed to produce any strong bullish or bearish argument on US yield potential while US wheat futures are falling in tandem with Paris losses due to the rising €uro and tepid export demand. EU fob wheat offers are holding at a strong premium to other regional suppliers due to poor quality, a smaller harvest, and stable domestic demand. Paris wheat is an export related contract, so heading into first notice day, liquidation occurs amid seasonally slow French demand.

• Wheat has been a drag on corn/soybeans which pulled values off their early session highs. China secured additional US soybeans in a daily USDA announcement, while the US ethanol grind was the ninth largest for any week on record. The August US corn grind for ethanol could reach a record 477 million bu. The strong corn ethanol usage along with the US’s competitive export position is building record large US corn demand, low prices are doing their job. The difficult question ahead is how big is big in terms of the 2024 US corn yield. This question is capping rallies. Chicago is currently trading a US corn yield of 183-184 bushels/acre, slightly above the NASS August estimate. The strong US corn demand profile should produce an early seasonal harvest low in the days/weeks just ahead.

• In what seems to be becoming an annual event,  water levels on the Mississippi River are seasonally crashing due to the late July/August dryness across the Delta and Ohio Valley. The Mississippi River Memphis TN gauge has reached .23 ft below sea level this morning. And based on the arid forecast, it is expected to decline even further. This is raising barge freight costs as smaller drafts will be required. FOB Gulf soybean basis has rallied to $0.88/bu over from $.84/bu on Monday. We do not see this as having much impact on US soy trade from NOLA, but it is something to pay attention to as the 2024 Delta harvest is underway.

• The USDA reported that 253,000 mt of US soybeans was sold to China and an unknown destination. We believe that China secured as many as 8-10 cargoes of US soybeans yesterday and is still asking for November/December offers.

• Turkey has continued to import an estimated 350,000 mt of mostly Russian wheat that has not been custom cleared on the prospect of selling at elevated prices once the import ban is lifted. Turkish millers have financially suffered in using higher priced domestic wheat for flour production and exporting flour into N Africa/Mideast at prevailing world rates since June. Rumours abound on whether Turkey will lift the import ban in October or extend it into December. The reopening decision is said not to have been made yet.

• Chicago price ranges in corn/soybeans are narrowing with Dec corn unable to rise above the 20-day moving average at $4.02. The wheat price break is via the offload of September spec positions in Paris with first notice day looming and a French export program lacking. The weaker US dollar has increased the interest from hedge funds for commodities, but they will await chart signals before acting. It is the wrong time of the year for a “V” bottom in grain.

• Chicago chops; US Dollar falls to new 7-month low; Spot Indian milling wheat trades at $8.90/bu.

•  Dull and choppy best describes Chicago at midday. Pro Farmer’s tour on day 2 is finding excellent potential in parts of eastern NE, but mixed results in OH and SD and as the trade has already digested large US crops new input is being sought. We note the US dollar is down another 0.3% at new 7-month low. Currency relationships are changing at a time when ag market seasonal trends turn less bearish and turn positive in corn and wheat in early Sep, and work suggests bearish leverage will be in retreat.

• US exporters sold another 371,000 mt of new crop soybeans to China and Mexico, bringing this week’s total a known basis to 814,000 mt. We reiterate that while Chinese purchases of US soy are considerably below normal, China is fully expected to secure 20-22 million mt of US origin between now and January. The glass half of full analysis is that a majority of these beans must still be priced.

• Spot Paris milling wheat is up €1.75/mt despite strength in the €uro. Ukrainian corn for Sep delivery is quoted $1.50-1.60 over Sep Chicago, and there is still nothing available from Ukraine October onward. Harvest there should begin in the next few weeks, and actual yield data is critical. USDA predicts Ukrainian corn yield to drop 15% below trend, but the complete absence of rainfall in central and eastern areas in July and the spread of dryness in August likely boosts corn yield loss there to 20-22%. For now, the Ukrainian cash corn market is in rationing mode.

• Brazil’s interior corn price index is quoted above year-ago levels for the first time since June. Lows in interior and fob premiums are typically scored in June. Strength in the Brazilian market continues to suggest some kind of supply disruption, whether due to crop size or logistics.

• Indian wheat prices have rallied another $3/mt this week, with spot milling market quoted at $8.90/bu. The rally in Indian wheat prices is unlikely to end until January or until modest imports are secured. Indian food inflation remains intact.

• Macro market influence leans negative. Equity markets are slightly weaker in corrective fashion, while spot WTI crude is down $0.40/barrel at $73.95.

• The Midday Central US GFS weather forecast has shifted the chance of spotty showers next week from NE/SD to MO but the overall pattern is consistent. High pressure riding aloft expands over the next 48 hours and covers much of the Central US Sat-Thurs. Precipitation will be forced into Canada and the Southeast, while high temperatures in the 90s briefly impact the southern Midwest. The GFS forecast allows this ridge to relax after Aug 30. Mild but dry conditions are forecast in the 11-15-day period.

• Bearish sentiment/chart patterns continue as the US pipeline is soon to be filled, with old crop cash pricing still a feature in corn and beans. Be prepared for a more two-sided market moving forward.

• Wheat sags on weakness in European market; Row crops add premium on US weather forecast; US corn exports stay robust.

• Chicago ag markets are mixed at midday. Corn and soy are adding modest premium as a two-week period of dryness and expanding warmth are forecast across the Plains, Midwest, and Delta, while FAS in its daily reporting system featured welcomed confirmation of Chinese demand for US soybeans. Exporters this morning sold a total 442,000 mt of soy to China/unknown for new crop delivery. Importers in Asia and elsewhere are now seeing the US soy as the world’s low-cost supply for autumn/winter delivery and are reacting accordingly. No new corn sales were announced, but fob premiums in Ukraine and Brazil remain well above US Gulf origin into Nov/Dec.

• Wheat futures worldwide have shed premium as the Russian cash market remains stuck at $219-224 for Sep-Nov delivery. Egypt’s talk of including Turkish wheat as an acceptable origin underscores larger year on year stocks in the Mid-East. Turkey will struggle to export supply amid its relatively high prices, but larger crops as Mid-East tension have harmed regional demand growth.

• US corn export inspections in the week ending August 15 totalled 46 million bu, vs. 39 million the previous week and vs. 20 million in the same week a year ago.

• The US’s competitive position in the global marketplace continues to be reflected in strong counter-seasonal export disappearance, and without a collapse in weekly inspections in the second half of August work suggests the USDA will hike its 2023/24 US corn export forecast another 25 million bu to 2,275 million.

• A Canadian rail strike looks to be unavoidable later this week (Thursday) as each side remains far apart on negotiations with just days to go. Contacts suggest mandatory arbitration will be enforced if the strike lingers beyond a few days, but tensions are high. It is the disruption to the movement of consumer goods that is most concerning. Rail has an outsized influence on Canadian logistics.

• Autumn shows no signs of approaching in far E Europe, Ukraine, and Russia. There is still no meaningful rain forecast there into Aug 29, while temperatures exist some 5-10 degrees above average. The Black Sea’s Spring row crop harvest will move along smoothly, but an easing of drought is needed prior to winter wheat seeding.

• The midday Central US GFS weather forecast is consistent with morning output in keeping rainfall confined to Manitoba in Canada, while tropical activity stays largest east of the eastern seaboard into Aug 29. Midwest temperatures stay mild into Fri/Sat. An expansion of abnormal warmth occurs thereafter, with max temperatures to reach into the low 90s across NE, MO, southern IL, and southern IN by Sunday. Variable temperatures are forecast in the 8-14-day period.

• The structure of the market (sizeable fund short positions) and the end of bearish seasonal price trends in late Aug/Sep suggest risk assessment moving forward will be more two-sided. Key in the short run is whether Dec Chicago corn can settle above its 20-day moving average at $4.04 and whether Nov beans find buying/short covering interest above $9.80.

• Corn/soybeans form new contract low and bounce; World Ocean Freight Rates Bottoming?

• Chicago corn pushed to a new contract low while wheat/soybeans retreat near prior early week lows. It is surprising that corn is enduring this much selling pressure amid rising overseas cash markets. Chicago corn selling is tied to old crop producer cash sales and the prospect of record large US yield. We note that world corn exporter stocks/use is at or near a record low, which is contrary to rising US corn stocks. US corn stocks as a percentage of world exporter total is record large at nearly 90% which strongly suggests that US corn export demand will be strong through April of 2025. Corn will have a demand story emerging once the market is able to understand how big is big in terms of the US corn yield. NASS has already released a record US corn yield of 183 bushels/acre; will the Pro Farmer Tour find an even larger yield next week.

• Paris wheat futures are rising on short covering with prices higher as the harvest comes to an end. 2024/25 world wheat trade through August 15 is 19.5 million mt, equal to last year which was 19.45 million mt. 2024/25 wheat trade is occurring regardless of Turkey’s absence as an importer of 1-1.4 million mt/month. 2023/24 world corn trade is up 19 million mt at a record 154.5 million mt with soybean trade at 138.7 million mt, down 1 million. The point is soybean trade is starting to struggle, but world grain trade is holding strong on falling prices.

• World ocean freight rates are finding their “sea legs” after falling for most of the past quarter on declining demand for iron ore. The rise in capesize and bottoming in panamax ocean freight indexes indicate that end users are seeing value in dropping ore/grain/freight costs. A low in the ocean vessel charter market could be a sign of improving world trade or that China is starting to become active as a grain importer. A year ago, China was an active buyer/importer of Brazilian corn from August through year end. China has imported record tonnages of Brazilian soybeans in the past year but has been non-existent in the world grain market as a buyer of wheat/corn.

• Chicago brokers estimate that the managed money has sold 4,200 contracts of soybeans and 6,400 contracts of corn, while being flat in wheat. In the soy products, funds have bought 2,100 contracts of soyoil and sold 3,200 contracts of soymeal. Soybeans and corn both scored new contract lows this morning.

• The Central US midday GFS weather forecast run is consistent with the overnight solution which raises our confidence in its correctness. A broad drying trend is ahead for the Central US with any extreme heat confined to the Plains and the Delta. Central US rainfall chances are poor, and soil moisture looks to stay in sharp decline. A high-pressure ridge holds across the Central US with brief intrusions into the Midwest. The higher heights aloft limits Midwest rainfall and retards the monsoonal flow of moisture from Mexico. The heat/dryness pushes crop maturation, but following the rains this week, any acute moisture stress comes too late to dramatically impact yield. We anticipate a 1-2% decline in good/excellent corn/soy ratings on Monday.

• The Russian/Ukraine war has entered a deeper boil with Ukraine destroying a Russian bridge over the Seym River which is hindering civilian evacuations. The enhanced war effort by Ukraine has grain traders cautious about taking a big-short into the weekend. Midwest cash basis levels are stabilising following early week cash corn/soy sales. Chicago downside price risk is waning while traders assess the managed money short. The Pro Farmer Crop Tour starts Monday and field yield reports will be numerous. Dry S American weather is staring to be watched amid the driest subsoil in over a decade.

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Weekend Summary 16 August 2024