• Ag markets so far this morning have traded in narrow ranges, and current sit close to unchanged. Wheat has caught a bit amid stability in EU futures, and following recent world tender results that show the price of trade execution well above recent years. Uncertainty will continue with respect to final Russian production. Some of our contacts prior to the USDA’s report lowered winter wheat estimates. Very little of the spring wheat crop has been harvested following delayed seeding and cool/wet summer weather. Spring wheat yield results will be followed closely.

• It is also unlikely that wheat production differences in the Ural and Siberian Regions of Russia will much affect the country’s export potential. Spring wheat does account for 40-45% of Russia’s production, which is important, but very little spring wheat is put onto the world market. EU milling wheat futures ended up €1.00-1.25/mt. Spot WT crude is up $.50/barrel at $69. US crude stocks remain very tight, and are likely to tighten further into winter. We note that a host of world veg oil markets are now priced below crude, which is historically rare.

• Ahead of this afternoon’s CFTC report, we estimate that on Tuesday managed funds were long a net 28,000 contracts of Chicago wheat, vs. 43,000 the prior week. Funds were also likely short a net 65,000 contracts of corn, up 7,000 contracts, and were net short 65,000 contracts of soybeans, up 2,000 contracts on the previous week. Importantly funds today are estimated to be short a massive 120-125,000 contracts of corn, and are net long just 12-15,000 contracts of wheat. That funds’ net wheat position is near flat is noteworthy. There is still potential for massive shifts in demand to the US based on elevated fob offers in Europe, Australia, and even Russia for Nov-Jan delivery. The Aussie weather forecast now lacks meaningful rain through the very end of September.

• Better, and needed, rains are offered to key areas in Southern Russia in the 10-15 day period. Confidence in this is low, but the extended range outlook will be watched over the weekend. The central US GFS weather forecast is drier than the morning run across the S Midwest, but has added precipitation to the North in the 8-15 day period. Favourably dry and mild weather occurs on the weekend. Harvest is and will be active into the early part of next week. Thereafter a more zonally flowing jet stream evolves, and a much more active pattern of rainfall returns to the E Plains and W Corn Belt. Cumulative totals of 5-8” are offered to IA, MN and WI, again.

• NASS yields, on the margin, lowered the burden on US grain balance sheets. Still, positive seasonal trends are noted in autumn/winter, and solid corn/wheat export demand is forthcoming.

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Weekend summary 14 September 2018

• It has been the kind of morning that you would expect following a bearish USDA Crop Report. Chicago futures trade either side of unchanged with fund selling noted on rallies while end users are buyers on breaks. No one wants to stick their necks out too far as the chart patterns are bearish with funds adding to their net corn and soybean positions. US farm selling has shut down on the break and most are now inclined to store as much of the crop as possible amid the hope that the US/China will find some common ground on trade. Details of coming meetings are occurring and will be awaited by the marketplace.

• The US in offering to talk with China is a big change from prior months as the White House has been waiting for China to call them. President Trump is tweeting that the US has the trade advantage, but it’s good to remember that no one wins in a trade war. The US Ag Senate Committee reminded USTR Ag Head Doud of this thinking as he testified this morning. We look for a mixed to lower close with traders now expecting that it will take a few weeks for the Chicago markets to heal before the Sept 28 Stocks and Final Small Grain Production report. The market is waiting on to see what happens with the pending US/China trade talks before deciding if even cheaper prices are needed. Downside price targets are $3.45 December corn.

• Chicago floor brokers report that funds have sold 4,300 contracts of corn, 2,100 contracts of wheat, and 3,200 contracts of soybeans, In soy products, funds have sold 1,200 soyoil and 1,900 contracts of soymeal. The weekly US export sales report showed that the US sold; 14.2 million bu of wheat, 30.5 million bu of corn, and 25.5 million bu of soybeans. The corn and wheat sales were below trade expectations, while soybeans were in line. For the start of the new crop year, 2018/19 US corn sales stand at 597 million bu (vs 413.5 million bu last year), and 625 million bu of soybeans, equal to last year. US wheat sales lag last year by 111 million bu or 24%. Algeria booked 630,000 mt of mostly EU wheat at prices of $262-$263/mt basis CIF. The fob price works back to $238-239/mt, right at replacement.

• The central US GFS weather forecast is wetter than the overnight as Florence comes ashore as a Cat 2 storm and stalls. Heavy rains of 10-20” cause widespread flooding across the Carolinas, but what is different from the overnight run is the activation of the northern branch of the jet stream that produces several strong storm systems across the Central US. This rain will keep harvest slow where rain exceeded 2.0” last weekend. The 10 day rainfall map indicates that a trend of above normal Central US rainfall. There is no indication of any cold air that would pose a threat to immature crops into late September. The last week of September looks to be warm/wet.

• The hangover effect of Wednesday’s bearish USDA crop report is being felt. The Aussie forecast remains dry while a few showers dot portions of W Russia. Traders are awaiting details of the coming US/China trade talks. But, few expect there to be much progress. Chicago is in liquidation and with spot corn to take aim on the 2017 lows at $3.30, even amid US and world stocks that are substantially tighter. Funds are liquidating wheat while Russia remains an active seller with the next support in Dec KC wheat being at $4.90.

• US grain markets are deep in the red, while beans are flat, following a bearish September USDA report. US soybean yield was pegged at 52.8 bushels/acre, at the higher end of trade guesses but a boost was largely expected. This morning’s surprise, however, is NASS’s national US corn yield at 181.3 bushels/acre, up 2.9 from Sep and which boosted production another 240 million bu. Implied ear weight is forecast at a new record. The US wheat balance sheet was left untouched.

• Total US corn consumption was raised 125 million bu amid upward revisions to ethanol, feed and exports. End stocks were lifted to 1,774 million bu. Recall the trade expected very modest cut to yield and production. US corn stocks/use are pegged at 11.7%. This in itself is not overly bearish relative to current prices, but corn stocks will be adequate without a downward revision to production in production in the Oct or Nov releases. Old crop corn stocks were lowered 25 million bu amid a hike in exports.

• New crop US soybean end stocks are estimated at 845 million bu, up 60 million from September. Carry-in was lowered 35 million bu amid higher old crop crush and exports. New crop crush was raised 10 million to a record 2,070 million. This could not quite offset the 107 million boost in production. New crop exports were kept unchanged. Old crop Chinese soy imports were lowered 2 million mt to 94 million. New crop Chinese imports were lowered 1 million mt to 94. We would mention that the US is proposing a new round of talks with China. Treasury Secretary Mnuchin has invited his Chinese counterpart, and so, should they accept this next round of talks, will between higher level officials. This won’t fully solve the issue of ballooning US soy stocks, but without a deal the market needs to find all available domestic demand as well as work to curtail 2019 acreage. The soy market, largely expecting a yield hike, is focused on renewed trade negotiation efforts.

• New crop world corn stocks were raised 1.54 million mt to account for larger US production. Global corn use and trade were raised slightly. USDA also lowered this year’s S American crops to better account for government estimates in Brazil and Argentina. New crop major exporter corn stocks/use is unchanged at 11%, vs. 12.6% last year. World wheat ending stocks were raised 2.3 million mt.

• Russian wheat production was pegged at 71 million mt, vs. 68 million mt previously. Russian exports were left at 35 million mt with feed use up 2 million. The rest will go into stocks. USDA cites favorable spring wheat growing conditions, but talk this week surrounding ongoing rainfall in Siberia (following very late planting) is noted. Also of note, spot WTI crude is trading another $1.20/barrel higher at $70.40. US crude stocks last week fell 5.3 million barrels to new multi-year lows. Seasonally, crude stocks tend to shrink further in mid/late autumn.

• The central US GFS weather forecast at midday is wetter across the Plains and Midwest in the 6-15 day period. Needed warmth and dryness continues across the Plains and Midwest into the early part of next week. Thereafter a more active pattern of moisture returns. Two events of note are forecast Sep18-26. Cumulative totals are estimated in a range of 1-4”. Favored areas will include KS, MO, IA and N IL.

• It is no doubt another bearish WASDE release, and further damage has been done to grain market charts. Major exporter corn and wheat stocks/use remain very tight, and so sales are not advised on breaks. Keep in mind the global wheat and corn end stock figures for the 2018/19 season compared to 2017/18! Gulf wheat this evening will widen its discount to European and Aussie origins. Gulf HRW should be offered at $232/mt, which matches Russian quotes reported this morning.

• Fund selling was noted in Chicago’s opening with corn, soybeans and wheat coming under pressure. Fund managers remember the bearish August crop report and fear a repeat tomorrow (the September data). Corn has held more stable relative to either wheat/corn as traders expect a record large 2018 soy yield. The problem is that although 2018/19 US soy stocks are likely to also reach records, soybean spreads are at full carry and US farmers show no indication of selling newly harvested crops. The profit this year is in storage, on soybeans, corn and wheat. Amid weak nearby basis levels, selling from the producer is likely to be limited with funds already holding a big short. The big question is who is going to be the big futures or cash related seller. This has end users looking to extend coverage on any post Chicago September report break. US corn and wheat have future demand stories.

• Chicago brokers report that funds have sold 3,600 contracts of corn, 2,600 contracts of wheat, and 3,500 contracts of soybeans. In soy products, funds have sold 2,100 contracts of soyoil and 600 contracts of soymeal.

• CONAB revised their estimates of 2018 Brazilian crops pegging the Brazilian soybean crop at 119.3 million mt (up 300,000 mt), corn at 81.4 million mt (down 800,000 mt) with the second corn crop falling 54.5 million mt (down 900,000 mt). WASDE has the Brazilian corn crop at 83.0 million mt and the soybean crop at 119.5 million mt. WASDE could reduce their 2018 Brazilian all corn crop estimate by 1.0 million mt. October Brazilian fob soybeans are offered at $2.47 over compared to the US Gulf at 15 cents over. That is a difference of $2.32/bu or 27%. For the first time, US Gulf soybeans for October rest at 27% below Brazil suggesting that their old crop stocks are exhausted. The big US discount is sucking up all non-Chinese world demand, but it has not yet produced any Chinese purchases. And Chinese domestic crush margins have reached their best levels in four years. Finally, the long-awaited run out of Brazilian bean supplies and China’s sharp rise in domestic crush margin is underway, the China supply squeeze is (at long last) on.

• Russian Ag Deputy Prime Minister Gordeev’s comment that Russia will export 30 million mt of 2019 grain. The politically strong Russian livestock/bread lobbies are hard at work to make sure that Russia does not over-export its harvest. We note that exporters report a quickly deteriorating protein level in Russian wheat, with the Government making sure that specifications adhere to contracts.

• NASS reported that 5% of the US corn crop is harvested with 86% of the crop dented. US corn good/excellent ratings improved 1% to 68%. 31% of the US soybean crop is dropping leaves with good/excellent ratings improving 2% to 68%. 24% of the US sorghum crop is harvested with 94% of the spring wheat harvest completed

• The central US GFS weather forecast brings Hurricane Florence across the border of NC/SC late Thursday as a strong cat 3 or weak cat 4 storm. The storm then stalls producing horrific flooding with rains of 20-30” plus inches. Damage to NC crops/infrastructure will be extensive. The Central US holds under a high-pressure ridge until a strong zonally flowing jet stream returns rain chances late next week. NE/IA looks to be in the cross hairs of a wet weather pattern. That wet flow persists into the last week of September.

• Traders are betting on a bearish soybean and neutral corn yield. US wheat production will not change until the final report on Sept 28. WASDE wheat changes will only include world production/trade/stocks. Our view is that grains have a bullish story to tell, while soybean outlook is bearish, but is the cash market reflecting that already?

• Chicago futures are mixed at midday following the overnight trends of firmer wheat/soybeans and weaker corn. The corn market lags the gains in soy/wheat on spread unwinding. There was not much weekend movement of US cash grain with harvest limited and everyone focused on the coming USDA report and international events. We look for a firmer close as funds cut a portion of their net short position. Traders have a bias of wanting to buy a bearish corn and soybean report on Wednesday. Chicago brokers estimate that funds have bought; 3-4,000 contracts of wheat, 2,400 contracts in soybeans, and 3,200 contracts of soymeal. Funds are flat in soyoil and corn. Funds were early sellers of 2,600 contracts of corn but have come back to repurchase much of that amount by midday.

•  ABARES estimated the Australian wheat crop at 19.1 million mt, the barley crop at 8.3 million mt and the canola crop at 2.8 million mt. 2018/19 Aussie wheat production was down 10% from last year, with barley off 7%, and canola down 24%. USDA has the 2018/19 wheat crop at 22 million mt in August but is expected to reduce their crop estimate by at least 2 million on Wednesday. We note that September is the most important month for Australian rainfall and the ongoing arid climate is likely to cause a further production decline in the ABARES crop reports to come. We note that E Australian hay prices have rallied $200/ton in the past two weeks to $550/mt as feed supplies become extremely scarce, as rains are not making grass (normally occurs in spring). The shortfall of feed has rallied E Australian feed wheat prices to $42-440/mt delivered Darling Downs. Since Australia does not allow grain for any world origin (other than the UK) to be imported for feed, a sizeable amount of the W Australian wheat harvest will be imported into Brisbane and used to maintain their livestock breeding herd. Total 2018 Aussie grain production at 33.2 million mt is the lowest in a decade when production fell to 25.4 million mt. We see Aussie 2018/19 wheat exports abroad at 12 million mt, compared with the USDA forecast of 16.0 million.

• Russia has exported a record 11.4 million mt of wheat since July 1. Russia is exporting an average 1.25 million mt of wheat/week. It only takes another 11 weeks for the 25 million mt Russian Ag ministry threshold to be reached. Russian Deputy PM Gordeyev validated this morning that Russia will restrict its wheat exports once sales or shipments reach 25 million mt. Like 2014, an export tax is expected.

• US weekly export inspections for the week ending Sept 6 are; 30.0 million bu of corn, 34 million bu of soybeans, and 15.8 million bu of wheat.

• Argentine grain/soy markets are near comatose as farmers/traders debate new export taxes at a fixed currency rate. Most farmers will not sell old crop grain amid the tax, which is making commercial replacement difficult. Argentine meal sales are dramatically slowing which is offering a US export opportunity.

• The central US GFS weather forecast stalls Hurricane Florence farther to the east and produces inundating rains over coastal N Carolina and the Atlantic. Much of the Midwest holds in a warm/dry flow for ten days. This will help advance the harvest. Only MN/WI are subject to heavier rainfall into September 20.

• Talk that China may end its weekly auction of Government rape/soy is offering support amid a weekend frost event across Heilongjiang. This is China’s primary soy production area. Otherwise, Chicago focus is on Wednesday’s USDA report (corn/soy yields). We see wheat as forging a trading low.

• It has been another morning of wheat liquidation, but corn and soybeans have done very little ahead of the weekend. Weekly corn export sales exceeded expectations slightly. Wheat and bean sales were in line with trade guesses. Additional news is lacking. Crude oil has turned lower as the US$ has strengthened.

• Through the week ending August 30, US exporters sold a net 41 million bu of new crop corn, vs. 21 million the previous week. New crop soybean sales totaled 25 million, vs. 22 million the prior week. US wheat sales totaled 14 million bu, vs. 15 million the week before. Total new crop corn export commitments, including old crop carryover sales, rest at 584 million bu, up 64% from a year ago. New crop US soybean commitments total 608 million bu, up 11% from last year. Cumulative US wheat sales stand at 344 million bu, down 23% from last year and the lowest since 2009. Only recently has the US Gulf wheat market become globally competitive. Details surrounding Saudi Arabia’s latest barley tender are absent, but the world barley trade fully expects this tender to push barley prices to newer multi-year highs. On Thursday evening Black Sea barley was quoted at $238/mt, vs. US/Argentine corn at $165. It is a minor issue for US corn supply and demand, but compared to barley, feed and milling wheat, and European corn prices, US corn simply looks cheap.

• Moderate rain is working across the E Plains and Midwest, and will linger in the region into Sun/Mon. Producers bemoan the weakening of corn stands in the wettest areas of IA and WI. Waterways will become inundated across the Central and Eastern Midwest in the next 24-48 hours. The midday GFS weather forecast maintains better rain potential in Central Ukraine in the next 5 days, which is a blessing for wheat producers. Southern Russia has been left dry, and still there is no sign of Central Europe’s drought ending.

• Ahead of the Sep WASDE report, average trade guesses include a modest downgrade to corn end stocks, while soy stocks are expected to balloon to 830 million bu.

• The central US GFS weather forecast at midday is unchanged in the US through the next ten days. Warmth and dryness follow this weekend’s soaking rain. Even the Delta will see much improved harvest conditions beginning early next week. The model does allow moderate rainfall to return to the Western Midwest in the 11-15 day period, but confidence so far out is low. This is particularly true as activity ramps up in the Tropics. We expect the models to have fits with their extended range outlooks moving forward.

• Close attention will be paid to this afternoon’s commitment of traders report. Harvest is also inching northward into the Southern Midwest. It is key that producers find solid corn yields if downside pressure is to return. We maintain that pre-USDA weakness is an opportunity for end users.

• The morning has been mixed in Chicago, with row crops higher and wheat finding new multi-week lows. Newswires have been much more active this morning, with weekly US energy data, Canadian stocks, Informa yield updates, and ongoing uncertainty over Russian grain shipments being digested. Russia’s Ag Minister has again been quoted suggesting there are no plans to impose any tax on wheat exports. The headline has triggered additional fund liquidation, and we do mention that managed funds in Chicago wheat as of this morning were long an estimated net 47-50,000 contracts. Sources say the missing qualifier is the word “yet” and it’s been discussed in recent weeks that Russia’s Ag Min will monitor wheat supplies and exports on a weekly basis. We urge caution against reading too much into Russian policy, which is still very fluid.

• EU milling wheat futures in Paris settled €1.25-1.50/mt lower ($0.04-0.05/bu). Gulf HRW’s discount to German and Baltic origin is widening.

• Informa pegs US corn yield at 178.8 bushels/acre, vs. 176.0 last month. Informa’s production estimate this morning rests 35 million bu above USDA’s. Informa pegs soybean yield at 52.9 bu/acre, vs. 50 last month. Informa’s US soybean production estimate is 112 million bu above USDA’s. We agree that US soy yield will inch towards 52-53 bushels/acre, and the issue is still the lack of export demand growth barring a resolution between the US and China. In corn, we maintain that 176-178 is the most probable range. Excessive rainfall in the Central and Eastern Midwest through the weekend needs close watching. Stats Canada’s major crop ending stocks report is a dud, statistically. All wheat end stocks are pegged at 6.2 million mt, vs. USDA’s 6.0. Canola end stocks are put at 2.4 million mt, vs. USDA’s 2.6. Combined stocks of wheat, canola, barley and oats is pegged at 10.6 million mt, just 200,000 mt above USDA’s estimate.

• US ethanol production through last Friday totaled 320 million gallons, up 5 million on the week and a bit larger than expected. Ethanol stocks fell 15 million gallons on the week. And US stocks fell 4.3 million barrels to new 3½-year lows. WTI crude is down $1.40/barrel at midday despite the drawdown. Concern over emerging market growth is apparent.

• The central US GFS weather forecast at midday is wetter in the Delta but otherwise little changed. Slow moving rains will work across the Central and Eastern Midwest into late Monday. The heaviest totals, 3-6”, will favour Central IL, IN, OH and portions of KY. Light but rather steady rain persist across the Delta/Southeast into early next week. Fortunately, drier weather evolves as expansive high pressure returns next week. Temperatures in the 6-10 day period will be 6-20 degrees above normal.

• It is clear the wheat market awaits better US export demand, or actual government intervention in Russia, before a lasting rally unfolds. But work suggests that once Russian exports are exhausted (with or without policy change), massive world import demand finds the US. Gulf wheat already is offered $10/mt below European origin and some $50/mt below Australian.

• Chicago futures have drifted lower at midday, with corn and wheat unable to break through first technical resistance. Major moving averages remain just above current prices, and the spark needed to trigger more pronounced buying/short covering is absent this morning. European milling wheat futures have turned lower in sympathy. Newswires generally have been rather quiet. The EIA’s weekly energy report is delayed until Thursday following the Labor Day holiday in the US. US weekly export sales are out on Friday.

• Egypt’s GASC secured just one cargo of Russian wheat for late October arrival at $218/mt, basis fob. Last week Egypt bought six cargoes of Black Sea wheat at an average price of $224/mt, fob, and so this tender reflects ongoing aggressive wheat offers out of Russia.

• US brokerage firm Allendale, via survey, pegs US corn yield at 177.7 bushels/acre. Production is estimated at 14,529 million bu, vs. USDA’s 14,586 million, a negligible difference. So far, no major surprises have been found from surveys and yield checks. Work does suggest it is unlikely NASS will raise corn yield in next week’s report. A final yield of 176-178 is most probable. Allendale estimates US soybean yield at 52.2 bushels/acre. US soy production is estimated at 4,636 million bu, vs. USDA’s 4,586. Soybean crop ratings and recent private estimates lean toward an ongoing supply-driven bear market without improvement in US/China trade.

• Official US corn and bean exports in July were a bit larger than expected. Using FGIS data in August, we peg final US soybean exports at 2,134 million, 24 million above USDA. Final US corn exports are calculated at 2,435 million bu, 35 million above USDA. Barring a surprise in Jun-Aug corn feed/residual, the odds of 2017/18 corn end stocks falling below 2,000 million bu are elevated.

• Australia’s climate outlook is trending drier in mid-Sep and beyond. Scattered rain will impact parts of NSW on the weekend, but dryness returns thereafter.

• There is also a noticeable lack of precipitation forecast in Western Australia into Sep 20. W Australia has been one of the country’s few bright spots in terms of rainfall since summer, but close attention will be paid to rainfall there moving forward. A wetter pattern is desired prior to early October.

• The central US GFS weather forecast is wetter across the Central and Eastern Midwest through the next 4-5 days. Cumulative rainfall in MO, IL, IN, OH and KY into next Mon/Tues is estimated in a range of 2-5”, with even heavier localised totals favouring C IL and C IN. A welcomed drier trend will be established in the 6-15 day period. Central US temperatures stay mostly above average.

• It is a day of position squaring in Chicago. NAFTA negotiations will be watched closely this week. Close attention will also be paid to forward global wheat prices, as Gulf HRW is level money with Russian origin for November arrival.

• It has been a broadly mixed morning in Chicago as corn and soybeans push higher at midday, while wheat trades lower. Dec Chicago wheat pushed below last week’s low and an uptrend line which triggered a pile of fund selling. However, the wheat market has held its 200-day moving average. The excessively long fund position in wheat is causing prices to flip and flop more aggressively, but this is something that we think that everyone must get used to until the Russian’s start to slow their wheat exports in October or November. We look for a mixed close with corn yield data starting to become more numerous across the S Midwest later this week. Delta corn yields are disappointing, and it will be key to see whether that trend follows northward. Soybeans are firm on soymeal demand amid the higher Argentine taxes.

• US export inspections for the week ending August 30 were; 52.5 million bu of corn, 28.3 million bu of soybeans, and 14.4 million bu of wheat. Corn exports were above trade estimates, while wheat was less than. For their respective crop years to date, the US has exported 2,273 million bu of corn (up 32 million or 1.4%), 2,068 million bu of soybeans (down 57 million or 2%), while US wheat exports at 192.3 million bu are 93 million or 33% behind last year. We would look for WASDE to adjust its 2017/18 soybean export pace upwards while trimming corn by 15-20 million bu. The US wheat export pace remains disappointing as Russia pumps out record early season tonnages.

• A newswire has reported that; “Russia meets with traders and sees no need to limit exports”. We believe that this headline is not truthful. Russia indicated to its exporters that it will monitor the weekly export pace with a tax decision coming that is in line with last week’s announcement of 30 million mt of total grain exports for the 2018/19 crop year. It is calculated that such export taxes could be in place by November/December as wheat continues to leave Russia at a record fast pace. There was no statement from the Russian ag ministry that it is willing to allow free grain exports through the crop year. Such a statement would doubly irritate the politically powerful Russian livestock lobby.

• We look for steady to a 1% decline in corn/soybean good/excellent ratings later this afternoon. The S Midwest corn harvest will start in earnest later this week. Sporadic test cutting offers some corn yields above and below last year.

• The central US GFS weather forecast is slightly farther south and east with excessive wet weather than the overnight or the EU model runs. The midday model is struggling with frontal positioning amid trying to determine the path of Hurricane Gordon. Our guess is that the projected midday GFS rains are too far south and will be pushed northward in upcoming runs. The wet areas of the Midwest are likely to receive additional moderate to heavy rain. Unfortunately, the wet flow persists into the 10-15 day period which will only exacerbate low lying flooding. This is raising concern for the early corn harvest. Temperatures stay near to above normal with no cold threats in sight. Minimum lows into mid-September across the Northern US will be in the 50’s to mid-40s.

• Chicago is trying to analyse through the political alterations of the weekend. Argentine export taxes are bullish to corn and soy products, but Russia is pumping out record wheat exports as farmers try to beat potential taxes or a halt of wheat trade amid rising domestic flour prices. Large US corn/soy yields are dialed into price, the key question going forward is whether yields are record large. Our view is potentially in beans, but questionable in corn. We favour buying grain breaks.

• 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.

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

Weekend summary 31 August 2018