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Happy Friday,
The complex unwound this week and wiped out the gains built over the past two to three weeks. Energy premium backed off on easing Iran signals, weather premium got pulled in soybeans, and massive hedge profit-taking hit the market. Corn saw one of the most dramatic conditions drops week-over-week. Everything was red — beans down 66¢, canola down $64.90, wheat down 26–38¢.
How the Week Closed
| Commodity |
Weekly Change |
| Corn (December) |
-23.5¢/bu |
| Soybeans (November) |
-66¢/bu |
| Canola (November) |
-$64.90/MT |
| Spring Wheat (December) |
-26¢/bu |
| HRW (KC) Wheat (Sept) |
-37.75¢/bu |
| SRW Wheat (Sept) |
-38.75¢/bu |
| Crude Oil (WTI) |
-$4.51/bbl (mid-$70s) |
| Heating Oil (ULSD) |
+2¢/gal |
Full red screen across the ag complex. ULSD was the only thing up on the week — still feeding that renewable diesel margin. WTI fell to the mid-$70s.
What Drove Markets This Week
Weather outlook improved — or at least that’s what the market is saying. That pressured soybeans, bean oil, and meal, which really brought the whole complex down, even despite crop conditions actually falling in this week’s report.
Energy premium backed off on signals of some ease with Iran. WTI fell $4.51 to the mid-$70s. That pulled bean oil down and took the oil seed complex with it.
Massive profit-taking. The market ran pretty quickly over the prior weeks, and lots of hedges hit the market that added heavy pressure on the way down.
Russia extended its diesel export ban until the beginning of September — big impact on the energy markets and helping keep ULSD propped up even as crude fell.
Drought conditions expanding across the Midwest — notably the Dakotas, Minnesota, Wisconsin, western Iowa, Nebraska, and pockets in the eastern Corn Belt. Conditions dropped across corn and soybeans in the US and across canola and wheat in Western Canada.
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Risk Flag: China Supplying Missiles to Iran
Reports that China is supplying hundreds of missiles to Iran, which the US has warned China about. The market is flagging this as a risk to the materialization of China’s 25 million metric ton soybean purchase commitment. If US-China tensions escalate over this, those commitments may not follow through. The market has been pressing this and pricing it in — but waiting for confirmation before making any major moves.
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Fund Positioning (CFTC as of July 28)
Funds were still bullish as of Tuesday — but note this is before the mid-to-late week unwind:
| Commodity |
This Week |
Last Week |
W/W Change |
| Corn |
+126.8K |
+56.7K |
+70K |
| Soybeans |
+160.5K |
+130.5K |
+30K |
| Bean Oil |
+108K |
+120.2K |
-12.3K |
| Meal |
+87.7K |
+73.5K |
+14.2K |
| SRW Wheat |
-8.2K |
-18.4K |
+10.2K |
| HRW Wheat |
+31.4K |
+26.7K |
+4.7K |
| HRS Wheat |
+7.8K |
+2.4K |
+5.3K |
| Canola |
+78.9K |
+54.4K |
+24.4K |
Positions in thousands of contracts, net managed money. Cutoff Tuesday, July 28 — before the mid-to-late week sell-off. Next week’s report will show how much got unwound.
Export & Demand Update
U.S. Inspections & Sales
| • | Corn: Inspections 1.48M MT (vs. 1.612M prior). Sales 527K gross, netted to 362K. Now 2.515M MT above USDA’s projection for this crop year. New crop: 1.147M MT, netted to 1.062M MT. |
| • | Soybeans: Inspections 349K MT (vs. 319K). Sales 306K gross, netted to 302K. New crop: 1.33M MT — another big new-crop number. |
| • | Soybean meal: 88K gross, netted to 63K. New crop 51K. |
| • | Wheat: Inspections 395K MT (vs. 230K — big pickup). Sales 288K, netted to 285K. |
| • | Ethanol production: 1.133M barrels/day (vs. 1.094M prior). Margins holding strong. |
Canadian Exports & Domestic Use
| • | Canola exports: 249K MT (big increase from last week). Domestic disappearance: 262K MT. |
| • | Wheat exports: 135K MT. Domestic use: 180K MT. |
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June Crush Stats: Record Month
Canadian canola crush came in at 1.169M MT for June — the largest single month this year. That puts the year-to-date at about 11.4M MT with July still to go. Estimates putting this year on pace for 12.3–12.5M MT of total crush.
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Processor Margins
Canola board (Nov): over $330/MT — about a $26 pullback W/W from the decline in bean oil and meal, plus a slightly firmer CAD. Soybean crush: over $2.50/bu (Aug), $2.62/bu (Sept). Still strong levels with lots of wiggle room. Biofuel demand outlook remains strong into new crop.
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U.S. Crop Conditions
| • | Winter wheat harvest: 81% (vs. 5-yr avg 79%, last year 79%). |
| • | Spring wheat headed: 92% (vs. 93% 5-yr avg, 91% last year). Conditions 53% G/E — unchanged W/W. However, 2% increase to excellent, but 1% increase in poor and 2% increase in very poor. So the crop getting worse is getting hit harder. Harvest started at 2%. |
| • | Corn: Silking 78% (vs. 74% 5-yr avg, 73% last year). Conditions 63% G/E vs. last year 73% — down 4 points from last week’s 67%. The steepest July conditions drop in two decades. Fair +1%, poor +2%, very poor +1%. |
| • | Soybeans: Blooming 80% (vs. 74% 5-yr avg, 74% last year). Pod-setting 47% vs. 39% avg. Conditions 63% G/E vs. 70% last year — down 3 points from last week’s 66%. Fair +2%, poor +1%. |
Drought conditions expanding in the Dakotas, Minnesota, Wisconsin, western Iowa, Nebraska, and pockets in the eastern Corn Belt. Despite these conditions dropping — including corn’s steepest July drop in two decades — the market sold off anyway on the improved weather outlook and profit-taking.
Canadian Crop Conditions
Saskatchewan
| • | Canola: 77.64% G/E — up 1% in G/E overall. However, the excellent category fell 4.24% into just good. So conditions are going backwards inside the G/E bucket. |
| • | Spring wheat: 87.08% G/E — up over 2% in G/E. But 10.45% fell out of excellent into just good. The crop is going backwards. |
| • | Topsoil moisture: 5% surplus, 67% adequate, 27% short. That is a 17% drop from surplus and adequate combined, week-over-week. Big deterioration. |
Alberta
| • | Spring wheat: 66.3% G/E (down from 68.4% last week). |
| • | Canola: 50.9% G/E (down from 54.2% last week). |
| • | All major crops: 60.3% G/E vs. 62.9% last week. |
Heat is showing itself across Western Canada. The crops that were already struggling are getting hit harder — and moisture is evaporating fast in Saskatchewan.
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Has the Market Overdone This Sell-Off?
Crop conditions are actually falling — corn just had its steepest July drop in two decades. Crush margins are still very wide, and renewable diesel margins remain strong out the curve. But the energy premium got pulled again, the weather outlook improved, and massive hedges and profit-taking hit the market all at once. There is a flag that the market may have been overplaying this downfall against what the conditions are actually showing.
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What to Watch Ahead
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Crop Conditions
Fell across both the Midwest and Western Canada. Corn saw the steepest July drop in two decades. August is critical for beans. Are conditions still deteriorating, or does the improved weather outlook actually deliver?
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Iran Conflict & Russia-Ukraine
Iran signals easing. Russia extended diesel export ban to September. Both are still active factors for energy and the ag complex.
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Chinese Energy & Ag Buying
China is back buying oil and expecting a big jump of imports through July to refill stockpiles. But the missiles-to-Iran report is a risk to their ag purchase commitments — specifically that 25M MT soybean commitment. If it doesn’t materialize, the market looks oversold. If it does fall apart, more downside risk on beans.
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Saskatchewan Moisture
17% drop in surplus + adequate moisture in one week, with 27% now classified as short. The excellent category on both canola and wheat is falling into just good. Heat continuing.
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Bottom line: The complex unwound hard and wiped out 2–3 weeks of gains. Energy premium pulled, weather premium pulled, massive profit-taking. But crop conditions are actually falling fast — corn’s steepest July drop in 20 years. The market may have overplayed this sell-off. 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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