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Happy Friday,
Third consecutive rally week — and this one really ran. WTI into the mid-$90s (Brent touched $100) on Iran escalation and Saudi tanker attacks. EU wheat production hit hard by ongoing heat. Chinese crude/gas stocks reportedly drawn down materially through June, which could force them back into the buying market. Beans +50.5¢, canola +$29.40/MT, wheat up big. Only SRW closed lower.
Important flag this week: the market is running on energy and war premiums stacked on top of a yield premium. If those geopolitical premiums back off, we don’t think the yield story alone will hold these levels. More on that below.
How the Week Closed
| Commodity |
Weekly Change |
| Corn (December) |
+20¢/bu |
| Soybeans (November) |
+50.5¢/bu |
| Canola (November) |
+$29.40/MT |
| Spring Wheat (December) |
+21¢/bu |
| HRW (KC) Wheat (Sept) |
+14.75¢/bu |
| SRW Wheat (Sept) |
-4.25¢/bu |
| Crude Oil (WTI) |
+$7.70/bbl (mid-$90s) |
| Heating Oil (ULSD) |
+15.5¢/gal |
Wheat up more than $1/bu on Chicago over the last two weeks combined. Brent touched $100 during the week before Friday’s pullback.
SRW the lone red mark — the wheat that’s most tied to export dynamics rather than direct war-premium flow.
What Drove Markets This Week
Iran escalation intensified. Attacks on Saudi oil tankers inflamed the conflict. Iran reportedly open to another resolution, but reports also point to the Trump admin planning fresh attacks. Bipolar rhetoric — but the market ran with the escalation side and WTI broke into the mid-$90s. Brent went past $100 before Friday’s pullback.
Russia diesel dynamics still spooking energy. The refinery attack and shift to potential net importer status from last week is still front-of-mind, and it’s directly boosting oil seeds via renewable diesel demand.
New wrinkle: China energy stocks. Reports indicate Chinese crude and gas reserves have drawn down materially through June. They’d been able to sit out most of the Iran-driven price move by burning inventory — but if those stocks are running low, the government has to step in as a buyer. That’s a potential structural bid under energy going forward.
EU wheat heat damage keeps compounding the wheat rally — over $1/bu on Chicago in the last two weeks combined. Layered on top of the WASDE 50-year-low carryout and Black Sea disruption from last week, wheat has a rare stack of concurrent bullish inputs.
Fund Positioning (CFTC as of July 21)
Third full-bullish week in a row. Every single commodity moved bullish direction — either adding to longs, covering shorts, or flipping from short to long:
| Commodity |
This Week |
Last Week |
W/W Change |
| Corn |
+56.7K |
+11.5K |
+45.2K |
| Soybeans |
+130.5K |
+75.2K |
+55.3K |
| Bean Oil |
+120.2K |
+108K |
+12.2K |
| Meal |
+73.5K |
+46.5K |
+27K |
| SRW Wheat |
-18.4K |
-35K |
+16.6K |
| HRW Wheat |
+26.7K |
+14K |
+12.7K |
| HRS Wheat |
+2.4K |
-5.7K |
+8.1K |
| Canola |
+54.4K |
+38.6K |
+15.8K |
Positions in thousands of contracts, net managed money. Cutoff Tuesday, July 21.
HRS flipped from short to long — last of the wheats to turn. Canola length up over 4x from the June low.
Export & Demand Update
U.S. Inspections & Sales
| • | Corn: Inspections 1.549M MT (vs. 1.554M). Sales 499K gross, netted 332K. New crop 700K+. Commitments now 2.15M MT above USDA’s projection with just 2 weeks left in the crop year. |
| • | Soybeans: Inspections 297K MT (vs. 448K). Current-crop sales 117K gross, netted 56K. See callout below on new crop. |
| • | Soybean meal: 209K gross, netted 185K. New crop 433K — another strong forward book. |
| • | Wheat: Inspections 214K MT (vs. 396K). Sales 301K, netted 290K. |
| • | Ethanol production: 1.094M barrels/day (vs. 1.04M). Margins strong as energy takes off. |
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Soybean New-Crop Sales: 1.542M MT (Again)
Second consecutive week over 1.5M MT in new-crop soybean commitments (last week was 1.809M). Additional export sales announcements landed through the week as well. This is the real China follow-through we’d been waiting on since the Trump-Xi meeting — and it’s the biggest single driver behind the +50.5¢ move in beans.
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Canadian Exports & Domestic Use
| • | Canola exports: 210K MT. Domestic disappearance 168K MT. |
| • | Wheat exports: 388K MT. Domestic use 109K MT. |
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Processor Margins Still Strong — But Narrowing
Canola board (Nov): $356/MT — slight pullback as seed futures outpaced bean oil and meal. Soybean crush: $2.98/bu (Aug), $2.95/bu (Sept) — also narrowing as bean seed took off on the new-crop China sales. Margins are still profitable, but the direction turned this week as seed prices ran faster than crush products.
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U.S. Crop Conditions
| • | Winter wheat harvest: 74% (vs. 5-yr avg 71%, ahead of 72% last year). |
| • | Spring wheat headed: 86% (matching 5-yr avg and last year). Conditions 53% G/E — down ~5 points W/W. 1% excellent gain, but 3% into fair and 2% into poor. Net material deterioration. |
| • | Corn: 59% silking (vs. 54% 5-yr avg, 53% last year). Conditions 67% G/E — down 1 point W/W vs. last year 74%. 2% moved out of good, 1% into poor, 1% good to excellent. |
| • | Soybeans: 66% blooming (vs. 60% 5-yr avg), pod-setting 32% vs. 24% avg — well ahead. Conditions 66% G/E, up 1 point W/W vs. 68% last year. |
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Warm & Humid Across All of North America
Overnight highs continue limiting plant relief through both Western Canada and the Corn Belt. Expect a hit to Monday’s conditions report if the pattern holds — especially on the corn side as silking progresses. Market will read further condition slippage as bullish.
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Canadian Crops: Behind-Pace + Hot = Risk
| • | Saskatchewan: Topsoil moisture 77% adequate / 12% surplus. Crop development: oilseeds 34% behind pace (2% ahead, 64% normal). Spring cereals 27% behind pace (3% ahead, 70% normal). |
| • | Alberta: Spring wheat 68.4% G/E (slight drop). Canola 54.2% G/E — down ~2 points W/W. All major crops 62.9% vs. 64.1% last week. |
The concerning combination: 34% of Sask oilseeds behind normal development, and hot daytime + hot overnight temps are hitting right now. Late-developing plants under acute heat stress lose yield. Alberta canola conditions confirming the deterioration in the province’s hardest-hit region.
Risk Management Flag
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Energy & War Premiums Are Doing Most of the Lifting
A yield premium has been added to the market — but it’s a fraction of the total move. If energy and war premiums start backing off, we don’t think the yield story alone holds these levels. If prices are profitable at current levels, this is the time to be actively protecting them.
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Practical approach: use futures and put options to lock in profit levels without committing physical too early or getting oversold on cash. That preserves your upside if the rally keeps running while capping the downside if headlines flip.
What to Watch Ahead
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Monday Crop Conditions Report
Corn silking at 59% with heat continuing. Expected step-back in ratings would be read bullish, but the yield premium alone isn’t what’s driving prices — see risk management flag.
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Iran & Trump Admin Response
Whether the admin follows through on planned fresh attacks vs. accepting Iran’s reported openness to resolution. This will decide whether the war premium extends or reverses.
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Chinese Energy Buying (New)
If Chinese stock drawdowns force government purchases back into the market, that’s a structural bid under energy — which flows straight into crush, ethanol, and RD margins on the ag side.
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Saskatchewan & Alberta Canola
34% of Sask oilseeds behind pace, Alberta canola down another 2 points, hot temps continuing. Watch for material G/E drops in coming reports.
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Bottom line: Third rally week in a row, with the biggest moves of the run. But the market is running mostly on energy and war premiums, not yield — and those can reverse fast. If prices are profitable, use futures and options to protect them now. 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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