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Happy Friday,
Wheat absolutely ran this week. Hard winter up nearly 72¢, soft red up almost 85¢, and the rest of the ag complex followed. The Black Sea story continues to worsen, China keeps buying soybeans at scale, and funds are now sitting on some of the largest net-long positions we’ve seen. Here’s what happened and what it means.
How the Week Closed
| Commodity |
Weekly Change |
| Corn (December) |
+28¢/bu |
| Soybeans (November) |
+48.5¢/bu |
| Canola (November) |
+$23.90/MT |
| Spring Wheat (December) |
+44.75¢/bu |
| Hard Winter Wheat (December) |
+71.75¢/bu |
| Soft Red Wheat (December) |
+84.75¢/bu |
| Crude Oil (front-month WTI) |
−$3.68/bbl |
| Heating Oil (ULSD) |
−14¢/gal |
Energy moved the opposite direction while the rest of the ag complex soared. All wheat contracts on December.
USD index at 99.705 (firmer w/w — a weak USD stimulates export demand, which is what we saw when the index was down at ~98.83 last week). CAD/USD at 1.3906, weaker CAD w/w as forecasted — this should help Canadian interior basis.
What Drove Markets This Week
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Black Sea — getting worse, not better
Russian August wheat export estimates were cut again, now down to just 1.9 MMT — another 300K MT drop week over week. Russia tried to stimulate exports by removing their wheat export tariff, but the problem was never price — it’s the damaged logistics and infrastructure in the Black Sea region. The tariff removal was essentially a non-event for fundamental trade. Funds tried to push wheat lower on the headline, but it doesn’t matter what the tariff is if the wheat has no way to get out.
There are also reports that Russia is attempting to stifle wheat-seeded acres — an interesting move from the government with forward-looking implications.
On the Ukrainian side, they’ve maxed out their EU wheat export quota. Trucks, rail, and ports are all at or near capacity — there simply aren’t the logistics to move more product.
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The CIA director made a quick trip to Moscow this week — and left relatively quickly. Russia subsequently stated it would increase attacks on Ukrainian infrastructure, with no announcements after the meeting of any plans to change course. Wheat and corn ran hard after this. The commodity market was watching the rhetoric closely: no peace deal, more infrastructure damage ahead, and more wheat potentially trapped in the interior and unable to reach export markets.
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Friday’s flash sales — soybeans and an interesting meal print
182K MT soybeans to China and 226K MT to unknown for 26–27 — another week of Chinese buying adding to the consecutive streak. But the interesting ones: 100K MT soybean cake and meal to Germany and 100K MT to the Netherlands, both for 26–27. European meal purchases of this size are notable and worth watching for what it signals about EU crush economics and protein demand.
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Canadian canola crush — record July, and August is tracking similarly
July canola crush came in at a record of over 1.3 MMT, and August is already trending in the 1.2–1.3 MMT range. Board crush margins back above $300/MT are giving the market confidence Canada will hit a 13.5 MMT crush number with upside — possibly 13.75 or even pushing toward 14 MMT, depending on shutdowns and operational efficiencies. Nameplate capacity is around 15 MMT. The math is straightforward: if you’re crushing 13.5–14 MMT against a production number that has to deliver, the S&D gets tighter.
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Bean oil — SRE pressure then a massive reversal
Bean oil came under pressure on rumors around small refinery exemptions (SREs) — the exemptions that give blending and RIN requirement relief to small refiners claiming economic hardship. If the SREs come in big, it’s bearish for oilseeds as demand obligations shrink (and can apply retroactively). Bean oil fell to just under 66¢ through mid-week. Then Thursday and Friday saw a huge reversal — bean oil closed Friday up over 3.5% (closer to 3.8%) on the day alone.
The U.S. administration has extended the SRE review period, but with midterms approaching, the reversal in bean oil suggests the market may be hearing that the exemptions won’t be as large as previously feared — possibly as the administration looks to garner farmer support heading into November. It’s worth noting: claiming hardship as a refiner when margins are at record levels is a tough sell.
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Fund Positioning — CFTC Managed Money
Funds kept adding — and in corn’s case, aggressively. A 135.7K contract add in corn in a single week is a statement. Every commodity except bean oil saw length added or shorts covered. This is the third consecutive week of bullish repositioning.
| Contract |
This Week |
Last Week |
W/W Change |
| Corn |
+317.5K |
+181.7K |
+135.7K |
| Soybeans |
+200.7K |
+151.8K |
+48.9K |
| Bean Oil |
+85.1K |
+91.2K |
−6.1K |
| Soybean Meal |
+95.9K |
+83.3K |
+12.6K |
| SRW Wheat |
−13.6K |
−25.3K |
+11.7K |
| HRW Wheat |
+42.5K |
+31.5K |
+11.0K |
| HRS Wheat |
+13.7K |
+11.7K |
+2.0K |
| Canola |
+93.8K |
+93.3K |
+564 |
Contracts, net. Data as of Tuesday — Wednesday through Friday saw massive price moves that will likely show even larger adds in next week’s report. Canola’s flat reading this week almost certainly doesn’t reflect the full picture.
U.S. Export & Demand Update
Export inspections
| • | Corn: 1.296 MMT vs. 1.944 MMT — down from last week’s outsized print but still a solid volume. |
| • | Soybeans: 421K MT vs. 294K MT — a nice bounce, and consistent with the demand picture the sales data is building. |
| • | Wheat: 425K MT vs. 514K MT — a step back but still in solid territory for this time of year. |
Export sales
Does not include Friday’s flash sales above.
| • | Corn: 348K MT gross (31K net — heavy netting this week). New crop at 1.083 MMT. |
| • | Soybeans: 99K MT gross (75.4K net). New crop printed an absolutely massive 2.486 MMT. That is a third consecutive week of huge soybean purchases, and this was expected — last Friday alone we reported nearly 1.4 MMT in flash sales. China is still in, and at scale. |
| • | Soybean cake & meal: 175K MT gross (105K net). New crop at 323K MT. |
| • | Wheat: 434K MT gross (400K net) — minimal netting again, meaning firm commitments. |
Canada
Canola exports at 118K MT, wheat at 511K MT. Domestic disappearance: canola 267K MT, wheat 173K MT. That canola disappearance number ties into the earlier point — the weekly pace supports August trending toward another 1.2–1.3 MMT crush month.
Ethanol: 1.112 million barrels per day, up from 1.089M last week.
Processor Margins
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Canola — back above $320/MT
Board crush over $320/MT on November, up from $305 last week. The weaker CAD is helping, and Friday’s bean oil reversal (up ~3.8% on the session) added fuel. These margins continue to underpin the 13.5 MMT crush confidence.
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Soybeans — margins recovering
Board crush at $2.44/bu on October and $2.61/bu on December — a bump from last week, with most of the gains coming on Friday as bean oil reversed course. The October contract bounced from $2.30 last week, and the December print shows the market pricing in stronger product value going forward.
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U.S. Crop Progress & Conditions
A theme is emerging across all three major crops: the good acres are holding or improving, but the ones that were teetering are falling off. That divergence within the categories matters as much as the headline number.
Spring Wheat
Harvest at 62%, well ahead of the 52% average and 51% last year. Conditions slipped back to 51% good-to-excellent, down 1 point after last week’s 1-point bounce. The category detail tells the story: 1% increase in excellent, but 2% out of good, 1% out of fair, and 1% into each of poor and very poor. The strong acres keep improving; the marginal ones keep sliding.
Corn
Maturity continues to run ahead: dough at 86% (82% avg), dented at 45% (41% avg), mature at 6% (right on average). But conditions took a notable 3-point drop to 57% good-to-excellent (vs. 71% last year). That’s the biggest weekly decline we’ve seen. Again, 1% increase in excellent, but 4% out of good and 1% into each of fair, poor, and very poor. If this pace of deterioration continues, it’s a signal the USDA may revise yield lower again in the September WASDE.
Soybeans
Pod setting at 91% (88% avg), dropping leaves at 6% (4% avg) — ahead on development. Conditions at 60% good-to-excellent, down 1 point (1% out of good, 1% out of fair, 1% into poor, 1% into very poor) vs. 69% last year. What stands out: last year at this time, soybean conditions were improving. This year they’re going the other direction. That divergence from the seasonal pattern is a concern.
Western Canada
Saskatchewan topsoil moisture stepped back again: 4% surplus, 49% adequate, 47% short or very short. Some rains came through, but they were not a significant factor in preventing harvest.
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Harvest is falling further behind — and it’s not the rain
Saskatchewan: all crops at 11% harvested vs. a 24% five-year average and 21% ten-year average. Spring wheat is at just 1%, canola at barely over half a percent. Alberta: all major crops at 4.2% vs. a 15.2% five-year average and 12% ten-year average.
The slow harvest is not primarily a weather delay — it’s an underdeveloped crop. The staging and development are behind where they should be for this time of year compared to the past five or ten years. That’s a fundamentally different situation than “rain slowed things down for a week.”
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Minimum temps are still holding above the frost threshold, but they’ve dropped a couple of degrees from last week. Fall is coming.
Alberta conditions: all major crops at 59% good-to-excellent, unchanged. All crops at 61%, up slightly from 60.3%.
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Alberta yield estimates — trending lower
Spring wheat dryland at 53.7 bu/ac (down from 53.9 two weeks ago). Canola dryland at 37.5 bu/ac (down from 37.7). Small moves, but the direction is lower — the opposite of the historical pattern where Alberta’s estimates tend to climb between the initial report and the final October print.
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How We’re Thinking About This
The wheat–corn dynamic drove the week. Corn led early, but wheat took over and absolutely ran. EU dryness with lower production, Ukraine’s quota maxed, and the Black Sea export picture getting worse by the week — all of it is flowing into U.S. wheat prices. Looking at the technicals, corn appears to have another 10–15¢ of upside, and wheat could have another 50¢. A lot of the market seems to be targeting similar levels.
But these are extreme levels with significant war premiums baked in. How quickly can Black Sea export terminals come back online? We don’t know what those timelines look like — and neither does anyone else. That’s exactly why locking in hedges at these highs makes sense. If you have the risk appetite, let a portion run higher or use put options to protect the downside while keeping the upside open. But get at least a portion hedged at these levels.
Australia is the next supply variable. Winter crops are holding for now, but the effects of the Super El Niño still have time to impact wheat and canola production through September and October. Weather-driven losses there would tighten the world wheat S&D that’s already stretched, and on canola, it would push the global balance to very tight levels relative to what trade requires.
SREs are the oilseed wildcard. The bean oil reversal Thursday–Friday suggests the market is recalibrating expectations. Watch for any rumors or announcements — this will be a huge driver for oilseeds, and the outcome has implications for crush margins on both sides of the border.
What to Watch Ahead
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Crop conditions — the September WASDE signal
Corn dropped 3 points this week. If the deterioration continues, it’s a signal USDA may revise yield lower again in the September report — which would send prices running. The corn condition trend is now the single most important data point for the near-term price outlook.
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South American & Australian weather
With wheat and corn at elevated levels and the canola S&D already tight, weather disruptions in either region would have outsized price impacts. The Super El Niño window runs through September and October for Australian winter crops.
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SRE announcements — the oilseed hinge
Check every source: Twitter, news wires, trade commentary. If the SREs come in smaller than feared, it’s bullish for bean oil and by extension oilseed crush economics. If they come in large, it retroactively reduces blending obligations and pressures the entire oilseed complex. This is a binary outcome with major implications.
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Bottom line: This was a monster week. Wheat moved 45–85¢ across the classes, soybeans added another 48.5¢, corn put on 28¢, and the fundamentals behind all of it remain intact. But these are levels where one unforeseen headline can crush prices as fast as they built. Preserve, protect, and lock in the values that work. No one ever went broke making money.
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Have a great week and reach out with any questions.
Stephen
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