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Happy Friday,
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Corn broke through $5 on a bearish grain stocks surprise, soybeans cratered below $13 after the 10% tariff relief didn’t materialize from the Xi-Trump meeting, and the G7 agreed to release 100 million barrels from reserves. It was a week of sell-the-news moments across the board. Here’s the full picture.
How the Week Closed
| Commodity | Weekly Change |
| Corn (December) | −30.5¢/bu |
| Soybeans (November) | −40.25¢/bu |
| Canola (November) | −$14.80/MT |
| Spring Wheat (December) | −15.25¢/bu |
| Hard Winter Wheat (December) | −26.25¢/bu |
| Soft Red Wheat (December) | −20.25¢/bu |
| Crude Oil (front-month WTI) | −$1.28/bbl |
| Heating Oil (ULSD) | +5¢/gal |
Red across the ag complex. ULSD the lone green, though diesel futures took a significant step lower on Friday’s G7 reserve release news.
USD index over 101.9 (firmer w/w). CAD/USD at 1.4257 (weaker w/w on higher U.S. rates and lower oil). 10-year still above 5%.
What Drove Markets This Week
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Grain stocks: corn was the big surprise
Corn stocks came in well above the high end of trade estimates. The final months of the crop year showed essentially lower disappearance, with adjustments to overall production and the feed and residual. That sent corn breaking through $5.
Soybeans got a slight bullish input from the report, as did wheat, but neither was enough to offset the corn pressure dragging the complex lower. The good news: Mexico stepped in to buy corn right after futures hit $5, a signal that near-inelastic demand remains, with the futures doing the work in the nearby to keep demand focused on U.S. sourcing.
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Xi-Trump: buy the rumor, sell the news, exactly as we called it
As we flagged last week, the Xi-Trump meeting felt like a buy-the-rumor, sell-the-news situation. Soybeans were not given the 10% tariff relief, which caused them to crater below $13/bu at market open. This is exactly why we said to hedge against the reversal. News stories and rumors can push prices up, and it pays to lock in those values before the actuality comes to the surface. It’s rarely as good as what the market hypes it up to be.
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G7 reserve release: the G7 agreed on Friday to release 100 million barrels of oil and other fuels from reserve stockpiles in response to the U.S. diesel export ban threat. Diesel futures took a significant step lower on the news. Separately, Saudi Arabia has raised pipeline flows to more than 80% of capacity, diverting oil from domestic refineries to the export market.
Russia-Ukraine: Ukraine picked up attacks on Russian refineries again towards the end of the week, even after Turkish delegates were in both countries negotiating peace deals. Russia has also extended its diesel export ban. Russian wheat exports did improve slightly through September as Baltic terminals pushed hundreds of thousands of metric tons more wheat, but that’s still significantly below the millions lost from the major Black Sea ports being down.
U.S. crush data: August soybean crush at 210 million bushels, 12 million below July. Canadian canola crush came in just under 230K MT, above July and nearly 30K MT above August 2025. The August Grain Crush Report showed 528 million bushels of total corn consumption, down month over month by just under 1%, but corn for fuel alcohol was actually up slightly. Ethanol remains strong; the loss in corn consumption was beverage alcohol.
Fund Positioning: CFTC Managed Money
Funds appear to have found their top. They sold across almost every product this week, with meal the only real exception. Traditionally, when funds start exiting big positions, they can move fast and keep going. That doesn’t necessarily mean they flip, but they can bring themselves down into a more mean-reverted state unless a major input arrives. The WASDE next week will be that input, particularly on the feed and residual number.
| Contract | This Week | Last Week | W/W Change |
| Corn | +381.2K | +404.0K | −22.9K |
| Soybeans | +246.6K | +265.1K | −18.6K |
| Bean Oil | +83.6K | +92.1K | −8.6K |
| Soybean Meal | +207.6K | +191.1K | +16.5K |
| SRW Wheat | −22.1K | −12.0K | −10.0K |
| HRW Wheat | +30.7K | +40.6K | −9.9K |
| HRS Wheat | +16.2K | +21.4K | −5.2K |
| Canola | +112.1K | +119.2K | −7.1K |
Contracts, net. Meal is the lone holdout. Everything else was sold. Two consecutive weeks of broad reduction.
U.S. Export & Demand Update
Export inspections
| • | Corn: 1.565 MMT vs. 1.960 MMT. Still a decent volume. |
| • | Soybeans: 1.152 MMT vs. 769.7K MT. Strong number. |
| • | Wheat: 311K MT vs. 340K MT. |
Export sales
| • | Corn: 872K MT gross (536K net). The gap between gross and net is notable, driven by cancellations. |
| • | Soybeans: 1.034 MMT. A nice pickup. |
| • | Soybean cake & meal: 32K MT gross (net −51K MT on the October crop year roll). New crop at 266K MT. |
| • | Wheat: 333K MT gross (289K net). Nothing to write home about. |
Canada
A pickup from last week. Canola exports at 131K MT, wheat at 455K MT. Domestic disappearance on canola came in big at 308K MT. Crush is getting the seed, and that weekly rate continues to support a 14 MMT or higher crush number. Wheat disappearance at just 91K MT.
Ethanol: 1.007 million barrels per day, down from 1.028M.
Processor Margins
| • | Canola board: over $327/MT on January. A big jump week over week. Bean oil closed Friday up 1.8%, and the weaker CAD is adding over $12/MT to the margin. Some meal softness, but the FX move more than offset it. |
| • | Soybean board: over $2.41/bu. Still inverted out to August, so strong upfront margins. Bean oil has been cushioning the drop caused by meal’s pullback. |
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CAD weakness: an inflation hedge and basis opportunity
The CAD/USD at 1.4257 and moving weaker means your U.S.-denominated commodities are now a natural inflation hedge against the strengthening USD. That shows up in the basis. Our view: we haven’t seen the low on the CAD yet. Revised Canadian job numbers, increasing unemployment, and a lack of energy prices propping up the Canadian economy all point to further weakness. That means basis appreciation opportunity for Canadian producers.
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U.S. Crop Progress & Conditions
| • | Winter wheat: planted at 27% (vs. 34% avg, 32% LY), emerged 8% (vs. 11% avg, 12% LY). Falling behind. |
| • | Corn: mature at 72% (71% avg, 69% LY). Harvest at 18%, right on pace. |
| • | Soybeans: dropping leaves at 75% (= avg). Conditions unchanged at 58% G/E (vs. 62% LY). Within the categories: 1% from excellent to good, 1% from poor into fair. Harvest at 17%, right on the average. |
Western Canada
Dry fields and minimal weather events delivered a big harvest week across all three provinces. Daytime temps were warm, some areas hitting extreme highs of +30°C, though overnights remain around 0 to −2°C. If the dry weather holds, we should see another significant jump in harvest completion next week.
Saskatchewan
Topsoil moisture: 13% surplus, 81% adequate, 6% short. A nice improvement that showed directly in the harvest numbers. All crops at 63% harvested (vs. 91% five-year avg, 82% ten-year avg), up 22% week over week. Spring wheat at 65%, canola just over 45%.
Alberta
All major crops at 60.1% (vs. 86.2% five-year avg, 68% ten-year avg). Spring wheat at 72.7%, canola at 31.1%. Both saw large jumps thanks to the same dry conditions.
Manitoba
Harvest at 51%, canola at 57%, spring wheat at 77%. A slight slowdown from some wetness through parts of the province, but overall should pick back up next week.
How We’re Thinking About This
Corn: watching for Pacific Nation buying at these levels. With the 10% tariff holding on soybeans to China, the PNW may need to run harder on corn to fill capacity. The northern states don’t have the traditional 1.5 to 2 MMT of corn flowing to Canada at these prices, and feed barley in southern Alberta is pricing at nearly a 30% discount to corn (corn usually needs to trade at parity to pull in that demand). That loosens the trade flow S&D for northern states. We want to see Japanese buying materialize through the next couple of weeks. Is $5 the price level that gets them interested? If they don’t step in before the WASDE, they’re waiting for another bearish input, potentially below $5. We’re looking at $4.93 as a support level to keep in mind.
Canola hasn’t found its own story. It’s been a product of the crush legs moving it around, particularly bean oil. That makes sense given crush is on pace to contribute about 67% of total canola use this year. AAFC came out with a 13.9 MMT crush figure for the 26-27 crop year, just below the ~15 MMT nameplate capacity (about 93% utilization), which is high but definitely possible. The 308K MT weekly disappearance we just saw makes it even more realistic, with potential to push over 14 MMT, though we need to account for any plant hiccups or logistics slowdowns. Lower exports this year as Australia moves back into price-sensitive locations will make Canadian exports very heavily reliant on China. Any issues there could loosen the S&D and depress prices.
Canola has been in a whipsaw range for the past month. The swings are large, but the range itself is well established with no concrete breakout in either direction. That’s a signal the market needs an official report to tell it which way production and demand are going. We are pushing collar strategies on canola right now: selling a call and using that premium to buy put options, which offsets the cost of your downside protection while still leaving some upward opportunity.
On the CAD: a weaker Canadian dollar means U.S.-denominated commodities become a natural hedge. We expect further CAD weakness based on revised job numbers, increasing unemployment, and the absence of energy to prop up the Canadian economy. That’s a basis opportunity, and it is something we’re actively looking at for positioning.
What to Watch Ahead
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WASDE next week
This is important given what the grain stocks report just showed. USDA would need to drop corn yield by about 2 bu/ac to return to nearly the same carryout situation we had before the stocks report. Feed and residual will more than likely get adjusted lower, since the previous season’s number is always used as a base, and the stocks report showed it was overstated by nearly 4%. How USDA handles that reconciliation will set the direction for corn through October.
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Golden Week in China
Pretty much everything is shut down. Don’t expect cash activity from China next week. The more interesting question is the following week: when they come back, do they come back in a big way? With China out, other countries may step aside too, though it will be interesting to see if Japan takes advantage of the quiet to step in for some opportunity at these lower price levels.
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Western Canada: another big harvest week ahead
Saskatchewan jumped 22% in a single week. If the dry weather continues, we should see another large pickup across all provinces. Canola at 45% in Saskatchewan and 31% in Alberta is the area to watch most closely.
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Bottom line: The grain stocks surprise, the tariff disappointment on soybeans, and the G7 reserve release all landed in the same week. Prices are lower, funds are exiting, and the WASDE is next. These are the kinds of weeks where protection earns its keep, and where opportunities start to emerge at the new levels if demand steps in. No one ever went broke making money.
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Let’s talk about protecting your operation
Whether you’re looking at collar strategies on canola, put options on corn at these support levels, or just want to walk through how your current hedges are positioned, we’re here to help. Book a time that works for you.
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Have a great week and reach out with any questions.
Stephen
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