• HEADLINES: Chicago extends overnight gains; Exporters sell corn to Mexico; Tropics more active.

• Chicago ag markets have extended overnight rallies at midday as few want to add to existing short positions amid escalating attacks in the Black Sea, following a drone attack in Moscow overnight, and as blast furnace heat impacts the Central Plains/W Midwest next week and possible confirmation of Indian wheat imports linger in the background. Stable crude and a recovery in the US equity market is also noted. Following extreme volatility, Dec corn is set to end modestly higher on the week. Nov soy is up 35 cents. Dec Chicago wheat has cut its losses to just 13 cents. Recall seasonal lows are very often scored in the second half of Aug/first part of Sep. We would still caution against chasing daily large daily moves, but it makes increasing sense to use correction to extend longer term supply coverage.

• Other breaking news is limited. Exporters this morning sold 112,000 mt of corn to Mexico for 2023/24 delivery. Mexico’s President has stated he would accept any resolution from third party trade panel regarding the future of GMO corn imports from the US. Key is whether the trade panel sides with the US and Canada on Mexico’s commitment to the US-Mexico-Canada Agreement signed in 2020.

• We also note that Brazilian corn fob premiums for Sep-Oct delivery rallied $0.10-0.15/bu overnight, with Brazilian corn on fob basis offered $0.05/bu above US Gulf origin for immediate shipment. North Hemisphere feed crop harvests keep global interest in corn imports somewhat subdued in early autumn, but along with sustained profitable ethanol margins it is clear Dec Chicago corn at $4.80-5.00 is not overvalued. Additionally, Dalian corn in China’s premium to US Gulf origin remains perched above $4.00/bu, vs. $2.60 a year ago in mid-August.

• A warm west Indian Ocean and cool east Indian Ocean, what is known as a positive Indian Ocean Dipole, is likely to sustain adverse heat and dryness in both western India and key parts of Australia. Recently released climate guidance suggests a continued failure of India’s monsoon in western production areas, with soy, peanuts, and rice to be most impacted. Southern Hemisphere weather patterns will be more closely followed beginning next week amid worsening drought in Argentina and building dryness in New South Wales and Queensland in eastern Australia. Despite Russia’s dominance of wheat exports and newfound exporter margins there, there is still no tolerance for additional supply dislocation. Unwanted rain will fall across the Canadian Prairies in the second half of August, with spring wheat and canola harvests imminent in Saskatchewan.

• The midday GFS weather forecast is consistent with the overnight forecast. A moderation in extreme/threatening heat occurs beginning next Sat/Sun as high-pressure ridging shifts south and west. However, the details of North America’s upper air pattern in late August will hinge upon the development and path of tropical storms, with activity in the tropics rising somewhat quickly.

• In the near term, heat bakes the Central Plains/W Midwest Sun-Tues and moves into the principal Midwest during the second half of next week. And there is just not a lot of rain in the forecast between now and Sep 1. Tropical storms/hurricanes will be key to US weather beyond the next 10 days.

• There is no sign that volatility ends as the bears highlight economic fragility and the bulls highlight ongoing supply threats. Pro Farmer results next week dominate daily price discovery. A seasonal bottom occurs by early Sep, which is normal.

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