• Chicago higher at midday on strong July census exports; Still no rain forecast in US Midwest, Brazil.

• Chicago row crop futures firm but off highs; wheat paces Tuesday rally on strengthening European market; Census US exports suggest USDA too low across the board. Macro markets are mixed, with crude down slightly but the US dollar index finding resistance at initial chart-based resistance.

• Global ag markets are firm at midday as Dec Chicago corn attracts buying/short covering interest above key moving averages, and as official US crop exports in August suggests varying degrees of upward revisions to US demand lie ahead. Additionally, world weather issues, outside of Australia, remain numerous and meaningful pattern changes are unlikely prior to the latter part of September.

• Census US corn exports in July totalled 207 million bu, up 115 million or more than double that of the 2023. Work suggests August US corn exports will be at/slightly above 200 million bu, which places final 2023/24 US corn exports at 2,285-2,290 million bu, vs. USDA’s projected 2,250 million. Census soy exports were 55 million bu, vs. 47 million the prior year and the lack of outright collapse in recent weeks implies final US soy exports will be 1,700-1,710 million bu, at/slightly above USDA’s forecast.

• Official US wheat exports in July totalled 73 million bu, vs. 64 million last year, and exports in August are projected at 92 million bu, up 38 million year on year. Jun-Aug US wheat exports are calculated at a 4-year high 220 million bu, up 37% from last. Low prices are uncovering demand for US products.

• Exporters sold another 131,000 mt of soybeans to China for 2024/25 delivery. Attention is being paid to rising hog prices and crush margins. We doubt US soybean exports in 2024/25 can exceed 1,800 million bu without S American weather issues or without lengthy seeding delays in Brazil this autumn, but we maintain China is likely to price an additional 675-700 million bu of US soy between now and early/mid-January. It is the condensed nature of Chinese buying that lends support on breaks.

• Brazilian soy producers will soon be allowed to plant soybeans as regional moratoriums are lifted, Sep 7 in Mato Grosso and Sep 20 in Parana, but Mother Nature is unlikely to cooperate with early seeding in Brazil. The midday GFS weather forecast is similar to other models in keeping S American rainfall rigidly confined to RGDS in far Southern Brazil into Sep 18-19. High temperatures in Central/Northern Brazil will be routinely in the low/mid-100s, or some 5-14 degrees above normal.

• It is far too earl for concern, but the timing of the arrival of Brazil’s soy surplus will be largely determined by weather over the next 45 days. Closer attention will be paid to S American weather beyond the next two weeks.

• Canadian canola futures are down sharply as that market looks for non-Chinese demand. Spot WTI crude is down $0.55/barrel at $69.75.

• The midday GFS weather forecast is more intense with incoming rainfall in LA, where 5-day accumulation will reach 3-10”, but is otherwise unchanged from the morning run. Elevated tropical activity soaks parts of the Southeast and Florida, but a lengthy period of dryness and normal/above normal temperatures is forecast elsewhere. Warmth returns next week. Highs in the 80s will be widespread across the Midwest. The GFS forecast hints of max temperatures Sep 11-15 in the 90s across the Southern and Central Plains.

• Focus is shifting from record US row crop yields to elevated disappearance in autumn/early winter. Recoveries between Sep and mid-winter are unremarkable, though we note that US Gulf corn is now offered at parity with S American origin and bulk short covering next week requires decently sized cuts to US corn/soy yields.

• Corn/wheat push Above 50-day moving average, produce chart market “melt-up”; China booked 6-8 cargoes of US soybeans; GFS weather forecast dry for the Central US next 10 days.

• Grains rally on morning reopening amid US corn/soybean yield questions and unwind of long stock/short commodity spread by hedge funds. December corn futures pushed above its 50-day moving average at $4.0775. Soyoil bounces as canola futures edge off limit losses and Canadian farmers fret over the loss of China as key import customer. The Canada/China canola row provides political pressure on Prime Minster Trudeau ahead of 2025 election. A higher Chicago close is expected due to the expectation of falling crop condition ratings.

• Midday Chicago grain futures are higher with wheat/corn pacing the advance. December corn futures rallied to $4.10 while December wheat futures to $4.66 on speculative short covering. The 50-day moving average was breached at $4.0775 in December corn and is being tested at $5.66 in December Chicago wheat. Dry Central US weather and the start of a new Southern Hemisphere growing season are offering Chicago support. The soybean rally has been constrained by the acute weakness of Chicago soyoil tied to the sharp fall of Canadian canola futures. Soymeal has been the upside product leader on strong cash premiums and talk of additional US export demand. US producer selling is limited with farmers not willing to sell new crop harvest amid the uncertainty of yield. The market has “technically” melted up in rather active volume.

• The USDA/FAS reported the sale of 132,000 mt of soybeans to China in 2024/25 crop year. Rumours are that China purchased another 6-9 cargoes of US soybeans on the overnight break. China remains active as a US soybean buyer.

• Chicago brokers report that the managed money has purchased 8,200 contracts of Chicago wheat, 10,400 contracts of corn, and 9,700 contracts of soybeans. In the soy products, funds have sold 4,300 contracts of soyoil and bought 7,100 contracts of soymeal. Active spreading of meal/oil has been reported.

• For the week ending August 30 the US exported 38.0 million bu of corn, 18.3 million bu of soybeans, and 21.3 million bu of wheat. For their respective crop years to date, the US has shipped out 2,048 million bu of corn, 1,642 million bu of soybeans and 210.8 million bu of wheat. Adding back 247 million bu on additional census corn exports (through June) takes the US 2023/24 corn export total above 2,300 million bu. USDA is 50 million bu too low with old crop corn exports at 2,250 million. And in soybeans, 72 million bu needs to be added back for Census which jumps 2023/24 US soybean exports to 1,715 million bu. WASDE is 15 million bu light on old US soybean exports. It is too early in the 2024/25 wheat export year to make any conclusions.

• US Presidential candidate Trump made China weekend comments that indicated that he and President Xi would manage to have a good relationship. Trump continued that US tariffs are not taxes on Americans but are paid for by other countries. However, as seen by Canadian farmers overnight, retaliation can often be swift and unexpected. China will not favour rising US goods tariffs.

• The midday GFS weather forecast is like the overnight solution. The GFS model is dry in the 10-day period for the entire Central US with any rain confined to the Northern Lakes and the Gulf States. A few showers may occur across MI/OH/PA but totals would range from 0.1-0.6”. The best rain falls across the Gulf states from afternoon convective thunder-storm activity.  Ours confidence in the GFS forecast is average due to the potential formation of tropical storms. An extended dry period is forecast across the Central US.

• Chicago is “melting up” on the charts as key moving averages are breached and the bears reduce risk ahead of the USDA September 12 crop report. Yet, we doubt that coming private crop estimates will veer too far from their August forecasts. Soybean seed size is in decline and could cause a bigger yield fall in October, but NASS will not catch soybean seed size drop in its September forecast. The sharp fall in US crude oil prices offers worry over world economic growth. The US is unlikely to run out of US soybeans without a dire S American weather problem from November into 2025.

• 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.