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Happy Friday,
Mixed week depending on the commodity. Some easing on the US-Iran front — Iran and Oman are working on a deal for Strait of Hormuz control, with Oman handling outbound and Iran inbound. Energy came into the week strong but failed to hold, with WTI down over $7. Corn conditions fell another 2% as heat and drought continue to take their toll. Black Sea attacks kept wheat whipsawing. Market is in wait-and-see mode ahead of the August WASDE on Thursday, August 12.
How the Week Closed
| Commodity |
Weekly Change |
| Corn (December) |
-2¢/bu |
| Soybeans (November) |
-11.25¢/bu |
| Canola (November) |
+$22.20/MT |
| Spring Wheat (December) |
-7.25¢/bu |
| HRW (KC) Wheat (Sept) |
-6.5¢/bu |
| SRW Wheat (Sept) |
Unchanged |
| Crude Oil (WTI) |
-$7.26/bbl |
| Heating Oil (ULSD) |
-21¢/gal |
Canola the sole ag commodity in the green. Energy came in strong but failed to hold on further Iran easing.
Wheat/corn spread sitting at 1.42 vs. a traditional ~1.3 — suggesting corn may need to go higher if Black Sea issues and conditions continue.
What Drove Markets This Week
Market is liking what it’s seeing on soybeans — conditions have improved or held the past number of weeks. August is obviously a huge factor for bean yield, but the market is pricing in a constructive outlook ahead of the August WASDE.
EU wheat production adjusted lower, but offset by increases out of Ukraine and Russia. That gave wheat the whipsaw through the week. Black Sea attacks are still keeping that tension alive.
Still seeing consistent soybean purchases from China, however this week came in below 1 million metric tons of new-crop sale commitments. Currently only sitting at 8.3 million metric tons of total new-crop sales commitments — still a ways to go. Market doesn’t want to see that number slide further.
Iran-Oman deal developing for Strait of Hormuz control (Oman outbound, Iran inbound). Pakistan also involved. But the US still needs to agree. Energy came in strong on the week but failed to hold — WTI down $7.26.
Fund Positioning (CFTC as of August 4)
Mixed overall. Oil seeds took the brunt of fund selling. Corn continued to add length:
| Commodity |
This Week |
Last Week |
W/W Change |
| Corn |
+144.8K |
+126.8K |
+18K |
| Soybeans |
+132.5K |
+160.5K |
-28K |
| Bean Oil |
+79K |
+108K |
-29K |
| SRW Wheat |
-24.9K |
-8.2K |
-16.7K |
| HRW Wheat |
+31.4K |
+31.4K |
Unch. |
| HRS Wheat |
+8.8K |
+7.8K |
+1K |
| Canola |
+69.5K |
+78.9K |
-9.4K |
Positions in thousands of contracts, net managed money. Cutoff Tuesday, August 4. Meal not reported in this week’s data.
Export & Demand Update
U.S. Inspections & Sales
| • | Corn: Inspections 1.884M MT (vs. 1.533M prior) — very solid. Sales 149.6K gross, netted to 117K. Now 2.632M MT above USDA’s projection — should see that adjusted in the August WASDE. New crop: 1.031M MT. |
| • | Soybeans: Inspections 343.9K MT (vs. 365.7K prior). Sales 51K gross, netted to 30K for current crop. New crop: 904K MT — below 1M MT. Total new-crop commitments sitting at only 8.3M MT. Market wants to see this pick up. |
| • | Soybean meal: 132K gross, netted to 101K. New crop 147K. |
| • | Wheat: Inspections 335K MT (vs. 417.5K prior). Sales 325K, netted to 296K. |
| • | Ethanol production: 1.107M barrels/day (vs. 1.133M prior). Margins still holding in the mid-to-high 50¢/gal range — solid on a historical basis. |
Canadian Exports & Domestic Use
| • | Canola exports: 92K MT. Domestic disappearance: 305K MT. Expecting to approach 12.5–12.75M MT of total crush for this year. |
| • | Wheat exports: 283.5K MT. Domestic use: 40K MT. |
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Processor Margins
Canola board (Nov): over $312/MT — pullback from a stronger CAD (better-than-expected Canadian jobs report) and weaker USD index. Canola seed was up $22.20/MT while bean oil and meal didn’t match that level, compressing the spread. Soybean crush: over $2.71/bu (Sept), $2.52/bu (Oct) — nearly $0.27 increase W/W as meal and bean oil had better moves vs. bean inputs. Ethanol: mid-to-high 50¢/gal.
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U.S. Crop Conditions
| • | Winter wheat harvest: 86% (matching 5-yr avg 86%, last year 85%). |
| • | Spring wheat headed: 92% (vs. 93% 5-yr avg, 91% last year). Conditions 55% G/E — 2% increase in good W/W with 1% out of poor and 2% out of fair. Harvest at 5% (vs. 8% 5-yr avg, 4% last year). |
| • | Corn: Silking 90% (vs. 87% 5-yr avg, 86% last year). Dough 43% (vs. 38% avg, 40% last year). Dented 6% (vs. 5% avg). Conditions 61% G/E — down 2% from last week’s 63%, well below last year’s 73%. Good category down 2%, poor +1%, very poor +1%. |
| • | Soybeans: Blooming 88% (vs. 84% avg, 84% last year). Pod-setting 62% (vs. 55% avg, 56% last year). Conditions 63% G/E — unchanged W/W, below last year’s 69%. No category changes. |
Drought monitor improved through the eastern Corn Belt, but from middle Iowa west — both north and south — things are taking a step back. The western and northern states remain under heat and drought stress.
Canadian Crop Conditions
Saskatchewan
| • | Crop development: Oilseeds 71% ahead or normal. Spring cereals 78% ahead or normal. |
| • | Topsoil moisture: 2% surplus, 50% adequate, 42% short or very short. A big drop W/W — last week was 5% surplus, 67% adequate, and only 27% short. That is a 17% combined drop out of surplus and adequate into short. |
Alberta
| • | Spring wheat: 63.6% G/E — nearly a 3% drop W/W. |
| • | Canola: ~49% G/E — down about 1% W/W. Third week in a row of conditions pulling back through Alberta. |
| • | All major crops: Continued drop for another week in a row. |
Looking Ahead: August WASDE
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August WASDE: Thursday, August 12
This will likely be the biggest driver through next week along with Monday’s crop conditions. Expect added volatility in the days and hours leading up as positioning gets set. Trade estimates will be hitting the market more publicly in the lead-up.
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What we’re seeing on the models:
| • | Corn: Leaning to a 1–2.5 bushel per acre reduction in yield due to declining conditions over the past few weeks. Trade estimates targeting around 180–184 bu/acre. These are model-based, not field surveys — take with a grain of salt. |
| • | Soybeans: Leaning towards keeping USDA yield unchanged or possibly a slight bump of 0.5 bu/acre, given conditions have held and relatively improved. |
Risk management approach: Focus on using put options to protect against any potential increase in yield estimates that could drag prices down. Puts allow physical to still capture upside without the defined risk of selling futures. Reports move fast with algorithms — options keep risk capital better in check.
What to Watch Ahead
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August WASDE (Thursday, August 12)
The biggest event next week. Corn yield adjustment is the key variable. Export projection should also get adjusted given corn is now 2.632M MT above USDA’s number.
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Monday Crop Conditions
Corn down another 2% this week. Market will be watching closely to see if the slide continues or stabilizes before Thursday’s report.
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Drought Stress — Western & Northern States
Eastern Corn Belt improving, but from mid-Iowa west things are getting worse. Important for what type of corn, soybean, and wheat acres are in those northern states.
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Saskatchewan Moisture
42% of cropland topsoil now short or very short — a 17% combined drop W/W out of surplus and adequate. This is accelerating.
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Energy & Iran-Oman Deal
A deal is developing but the US still needs to agree. Wouldn’t want to be betting on energy direction right now — flare-ups of the conflict are still possible.
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Bottom line: Mixed week. Corn conditions still falling, Saskatchewan moisture dropping fast, Alberta conditions pulling back for a third straight week. Market is in wait-and-see mode for the August WASDE on Thursday. Use put options to protect ahead of the report. Preserve profit and protect when you can. 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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