|
Happy Friday,
China showed up this week — and the market noticed. Massive soybean purchases, a worsening Black Sea export picture, and Pro Farmer confirming the USDA’s yield cut sent funds flipping aggressively bullish. Here’s the full picture and what it means going forward.
How the Week Closed
| Commodity |
Weekly Change |
| Corn (December) |
+25.25¢/bu |
| Soybeans (November) |
+47¢/bu |
| Canola (November) |
−$19.20/MT |
| Spring Wheat (December) |
+20.25¢/bu |
| Hard Winter Wheat (December) |
+4.75¢/bu |
| Soft Red Wheat (December) |
+9.75¢/bu |
| Crude Oil (front-month WTI) |
+$4.45/bbl |
| Heating Oil (ULSD) |
+20¢/gal |
All wheat contracts now on December. Canola was the lone red print, giving back almost $21/MT on Friday alone after an otherwise firm week.
USD index at ~98.83 (weakening). CAD firmed to 1.3766 on energy strength and USD softness.
What Drove Markets This Week
|
China stepped in — and the soybean market responded
Friday’s flash sales alone showed 712K MT of soybeans to China and 720K MT to unknown for 26–27, plus 205K MT of corn to unknown. That was on top of numerous Chinese purchases throughout the week. This is the kind of consistent, size buying that gives the market confidence China is genuinely in — and it explains why November soybeans ran 47¢ and why next week’s export sales report should print another big soybean number.
|
|
Black Sea — the supply squeeze is deepening
Russian August wheat exports are now expected to be the lowest since 2010. SovEcon slashed its estimate by another million tonnes, from 3.2 MMT down to 2.2 MMT, as disruptions continue to take a toll on operations. Russian wheat acres are also reported at their lowest since 2014. Ukrainian shipments have pulled back 70% on the same war-related issues. Two of the world’s largest wheat exporters are effectively operating at a fraction of capacity — and that’s the single biggest reason North American wheat is accumulating the premium it has.
|
Pro Farmer Crop Tour started this week and the early reads are essentially confirming the USDA’s yield reduction. That matters because it removes one bearish off-ramp — if the tour had come in well above USDA, it would have given the market a reason to sell. Instead, the numbers are validating the tighter production story and reinforcing the fund positioning shift we saw this week.
Canola’s Friday reversal was the outlier: after trading firm most of the week, November canola dropped nearly $21/MT on Friday to close down $19.20/MT on the week. The broader oilseed story hasn’t changed — it was a session-specific move to close out the week.
Fund Positioning — CFTC Managed Money
Last week we flagged that the net-long reductions were likely getting reversed post-WASDE. That’s exactly what happened — funds flipped aggressively bullish right across the complex. The size of these adds tells you this isn’t cautious repositioning; it’s conviction.
| Contract |
This Week |
Last Week |
W/W Change |
| Corn |
+181.7K |
+125.9K |
+55.8K |
| Soybeans |
+151.8K |
+109.0K |
+42.7K |
| Bean Oil |
+91.2K |
+79.0K |
+11.9K |
| Soybean Meal |
+83.3K |
+73.7K |
+9.6K |
| SRW Wheat |
−25.3K |
−33.4K |
+8.1K |
| HRW Wheat |
+31.5K |
+25.6K |
+5.9K |
| HRS Wheat |
+11.7K |
+9.8K |
+1.8K |
| Canola |
+93.3K |
+56.6K |
+36.6K |
Contracts, net. All green — every single contract saw funds add length or cover shorts this week. Corn +55.8K and soybeans +42.7K are standout adds.
U.S. Export & Demand Update
Export inspections
| • | Corn: 1.911 MMT vs. 1.760 MMT — a big week that topped last week’s already-solid number. |
| • | Soybeans: 270K MT vs. 409K MT — a pullback on inspections, but the new-crop sales pipeline tells the real demand story. |
| • | Wheat: 493K MT vs. 486K MT — solid back-to-back weeks as the global supply shift continues to route demand toward North America. |
Export sales
Note: these figures do not include Friday’s flash sales announced above.
| • | Corn: 361K MT gross (233K net). New crop at 887K MT. |
| • | Soybeans: 101K MT gross (85K net). New crop printed 1.723 MMT — another massive week as China continues purchasing. Back-to-back weeks north of 1.7 MMT in new-crop soybean sales is significant forward demand confirmation. |
| • | Soybean cake & meal: 187K MT gross (93K net). New crop at 387K MT — a strong number in its own right. |
| • | Wheat: 404K MT gross (394K net) — very little netting, which tells you cancellations are minimal and the commitments are firm. |
Canada
Canola exports at 116K MT, wheat at 432K MT. Domestic disappearance: canola 267K MT, wheat 115K MT.
Ethanol: 1.089 million barrels per day, down from 1.117M last week. Energy continues to support margins, but corn’s aggressive move to the upside is compressing the other side of the equation — the same dynamic we flagged last week is intensifying.
Processor Margins
|
Canola — margins rebounded
Board crush back up over $305/MT. Despite a firmer CAD, strength in meal and bean oil combined with the Friday weakness in canola seed futures pushed margins back out. Last week we had this at $286/MT — so a meaningful expansion even as the CAD works against it.
|
|
Soybeans — margins compressed
Board crush at $2.36/bu on September and $2.30/bu on October — a significant drop from last week’s $2.68 and $2.54. The seed futures ran hard on the China buying, outpacing meal and oil. This is exactly the opposite dynamic from canola: the seed moved, the products didn’t keep up, and the margin got squeezed.
|
U.S. Crop Progress & Conditions
Spring Wheat
Harvest at 41%, well ahead of the 34% five-year average and 33% last year. Conditions ticked up 1% to 52% good-to-excellent — a stabilization after last week’s 4-point drop. Plenty of movement within the categories (1% out of excellent, 2% into good, 3% into fair, 3% out of poor, 1% out of very poor), but the net result is a slight improvement.
Corn
Running ahead on maturity: dough at 76% (70% avg), dented at 29% (24% avg), mature at 4% (3% avg). Conditions slipped to 60% good-to-excellent, down 1 point (1% out of good, 1% into very poor) vs. 71% last year. After last week’s stabilization, we’re back to the declining trend — and the 1% moving into very poor rather than just poor is worth noting.
Soybeans
Pod setting at 85% vs. 80% average and 80% last year — ahead on development. Conditions at 61% good-to-excellent, down 1 point (1% from good into fair) vs. 68% last year. Third consecutive week of declining conditions.
Western Canada
Saskatchewan topsoil moisture actually improved: 2% surplus, 54% adequate, 44% short or very short — better than last week’s 1/49/50 split, as parts of the province picked up some rain through the week.
|
Harvest is materially behind — and the rain didn’t help
Saskatchewan: all crops at 4% harvested vs. a 15% five-year average and 12% ten-year average. Alberta: all major crops at just 1.1% vs. a 6.6% five-year average and 5.1% ten-year average. The rains that improved topsoil moisture are the same ones slowing harvest progress. With overnight lows holding above freezing for now — delaying frost hits and giving crops more time — the situation isn’t immediately critical. But the further this harvest falls behind, the more important carryout becomes for executing against vessels.
|
Alberta conditions: all major crops at 59% good-to-excellent, essentially unchanged week over week.
How We’re Thinking About This
Wheat has approached recent highs — and the risk goes both directions from here. The Black Sea story is real and the premium is earned, but all it takes is one report that capacity is coming back online and the market reprices faster than any producer can react. At these levels, consider put options that protect the downside while leaving the upside open if Black Sea constraints persist. The hedge locks in strong values without giving up the trade if things get worse.
Basis appreciation is the opportunity in North America. World trade is already turning toward reliable North American execution, and the weaker USD makes that even more attractive — it effectively adds a premium that exporters can capture. This dynamic is supportive for both wheat and corn.
The wheat–corn ratio has compressed to ~1.37, mostly on corn’s strength and the pressure wheat took on Friday. If the Black Sea issues persist, we may see more compression — likely driven by corn continuing to firm rather than wheat pulling back. That relationship can be a benefit if the export disruptions continue and the market finds no near-term path to resolution.
Western Canada: overnight lows above freezing is delaying frost hits, giving the crop some reprieve. But the harvest is materially behind historical pace, and any further slowdown starts to create real logistical pressure — particularly in the nearby, where basis and carryout execution against vessel lineups become increasingly important.
What to Watch Ahead
|
Black Sea developments — the premium hinge
Any positive news — capacity coming back online, a moratorium agreement between Russia and Ukraine, improving export flows — and the war premium comes out of wheat and pressures corn alongside it. No resolution and these prices have room to continue building. Be well protected at these levels.
|
|
Western Canada harvest pace vs. frost timing
The gap between actual harvest progress and historical averages is wide. Overnight lows are holding above zero for now, but that window closes a little more each week. A slow harvest combined with an early frost creates both production risk and logistical pressure on basis and carryout.
|
|
Next week’s export sales report
Given the volume of Chinese purchases this week — including Friday’s flash sales that won’t appear until the following report — the soybean number should be another headline print. Watch whether it sustains the confidence that China is genuinely committed to these purchases at scale.
|
|
Bottom line: China is buying, the Black Sea is constrained, and the funds are positioned for it. The fundamentals are supportive at these levels — but they’re also the kind of levels where a single headline can move the market faster than you can react. Protect the values that work for your operation. No one ever went broke making money.
|
Have a great week and reach out with any questions.
Stephen
|