• Rumours that biofuel mandates could be lowered for 2020/2021/2022 had soyoil falling to near limit losses on Friday. RIN values are also in retreat. But it is worth noting that renewable diesel demand is not likely to be affected by changes to the federal mandate. This demand appears to be almost insatiable. Yet, after the close EPA indicated that 2022 biofuel mandates would be higher and that reductions for 2020/2021 were based on reduced fuel consumption due to the pandemic. The 2020 and 8 months of 2021 biofuel blending has already occurred. This means that only 4 months might be impacted. The real impact is on the cost that refiners would have to pay in terms of past RIN purchases. The impact on biodiesel blending is negligible. In our opinion Chicago was too bearish on the newswire flash.

• Pro Farmer released its soybean yield estimate from the week’s Crop Tour. The national soybean yield was pegged at 51.2 bushels/acre, with a crop of 4,436 million bu. The yield was 1.2 bushels/acre larger than the August NASS yield. Based on the Tour’s yield estimate, the September NASS yield can be expected at 51.7 bushels/acre, +/- 0.9. November soybeans fell back below $13.00, where we expect scale down Chinese buying. Our longer-term outlook calls for higher prices into early 2022.

• Dec Chicago corn fell to initial chart-based support at $5.30-5.40 amid negative demand input. The EPA is unlikely to mandate ethanol consumption growth beyond 2022, though actual ethanol production and use will be subject to gasoline consumption. We do not view any change in the RFS as significant to spot and future domestic corn consumption.

• Pro Farmer estimates US corn yield at 177 bushels/acre and production at 15.1 billion bu. If realised, this would add 365 million bu to 2021/20 US supply. We note that NASS’s Sep yield has a slight tendency to be above Pro Farmer, but NASS’s final yield correlates poorly with the Tour’s estimate. Note also that this year’s Tour yield is 0.5 bushels/acre below last year. If we used the Tour’s state by state Midwest yields and included NASS August yields for other states, the yield that is arrived at is 173.9 bushels/acre. Pro Farmer adjusts the US corn yield based on other assumptions.

• The lack of a US yield disaster keeps the normal seasonal price trend intact. Lows are normally set in late August with a demand-driven recovery unfolding thereafter. The timing and intensity of this recovery will hinge upon US export demand. US Gulf corn is the world’s cheapest feedgrain.

• US wheat futures ended 4-14 cents lower led by Dec Chicago, amid ongoing macro-based selling and weakness in corn and soy markets. We maintain that wheat will remain the bullish leader of the ag space into winter. Current prices should be used to scale into end user supply coverage.

• Spot Paris milling wheat again found fresh seasonal highs at €273/mt ($8.70 per bushel) as end users in Europe scramble to guarantee high quality milling supplies. And Russia’s interior wheat market rallied another $10-15/mt. Spot wheat in Russia’s southern region has rallied $40/mt in 30 days. Current prices indicate that exporters can only make money at FOB prices above $300-310/mt. Russian exporters total cost burden will rise further as the calculated export tax increases. Taxes will start going up next week.

• It is only August and already the world has a major milling wheat supply issue. Highs are not expected until late winter. Newer price highs lie in the offing, with $8.50 still targeted in Dec-January in KC December futures.

• Any weakness is a buying opportunity.

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