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Happy Friday,
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The October WASDE was a big one. USDA raised the corn yield to 181.2, well above even the high end of trade estimates, and sent futures to the limit down before finding a bid. Meanwhile, merchant vessels are now being hit by drones in the Black Sea, attacks in the Strait of Hormuz are pushing energy around, and crop conditions took a 3% hit on corn that the WASDE apparently didn’t agree with. Here is everything that happened and what it means for your operation.
How the Week Closed
| Commodity | Weekly Change |
| Corn (December) | −18¢/bu |
| Soybeans (November) | +13.75¢/bu |
| Canola (November) | +$1.50/MT |
| Spring Wheat (December) | −2.75¢/bu |
| Hard Winter Wheat (December) | −16¢/bu |
| Soft Red Wheat (December) | −12¢/bu |
| Crude Oil (front-month WTI) | Unchanged |
| Heating Oil (ULSD) | +16.5¢/gal |
Most of the corn damage came on WASDE day. Futures went essentially limit down (−30¢), found a bid at $4.72, and clawed back to close down 20¢ on the session. Soybeans and canola quietly green on the week.
USD index over 102.25 (firmer w/w). CAD/USD at 1.4266 (weaker w/w). Canada’s September jobs report showed a loss of 68,000 jobs, pushing unemployment to 6.5%. The CAD is still being propped up by where energy prices are; if energy normalizes, the question is where the CAD goes from there.
What Drove Markets This Week
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October WASDE: corn caught the market off-guard
Corn: USDA raised the national average yield to 181.2 bu/ac, a major miss against even the high end of trade estimates, where the consensus had been for a yield drop. This is especially surprising given that the crop progress report just showed a 3% hit to good-to-excellent conditions. USDA also increased both supply and demand across nearly every major line item, but the net effect is a significant supply increase pushing carryout over 1.8 billion bushels. This puts the current crop as the second largest on record.
Soybeans: yield moved up to 53.1 bu/ac, slightly above average trade estimates. Exports raised only about 10 million bushels. Not the kind of surprise we saw on corn. The market had been trending toward a slightly more bullish read on beans, so this was more of a status quo print.
Wheat: U.S. had a slight production increase, export cuts of 25 million bushels, and a feed use increase of 10 million, netting to an ending stocks increase of about 23 million bushels. Canadian wheat production raised 0.5 MMT to 36.5 MMT. World carryout essentially unchanged, but notably, USDA called out the stranded supply in Russia and Ukraine due to Black Sea conflicts.
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FAS World Oilseed Report: canola crush at 14.5 MMT
USDA left Canadian canola production at 22.5 MMT but has crush estimated at 14.5 MMT with just under 7.9 MMT of exports. That crush number is something we have been calling out for weeks given the massive board margins and what the weekly disappearance data has been showing. On the export side, we have also been flagging that swing countries for those export volumes will drop this year versus last year, so there should be less of that export strain we saw previously.
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Black Sea: merchant vessels now being targeted
A wheat vessel was attacked by a drone in the Black Sea this week, just a day after a Turkish vessel carrying corn was also hit, killing two crew members. This is a new escalation: we are now seeing merchant cargo ships being directly targeted, not just port infrastructure. The wheat vessel is particularly significant given the region’s importance as a wheat export corridor.
More attacks on vessels in the Strait of Hormuz also sent energy running, alongside continued infrastructure attacks between Russia and Ukraine. A peace deal looks unlikely without major sanctions relief for Russia.
The Baltic Sea has cushioned some of the lost Black Sea grain shipping, but volumes are running about 50% below what they were in September. And now Baltic countries are seeking an EU ban on Russian grain trains running through their territory. If that goes through, it would take away the Baltic corridor that Russia has been relying on as an alternative.
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Fund Positioning: CFTC Managed Money
This is an important report because it captures what happened after the grain stocks report that pushed 25-26 carryout over 2 billion bushels on corn. Funds reduced their corn long by 51.4K contracts, their largest single-week sell in this series. But they are still carrying a big long. The critical question now: with the WASDE today pushing carryout over 1.8 billion bushels on new crop, how much more do they need to exit? This data does not capture the WASDE-day selling.
| Contract | This Week | Last Week | W/W Change |
| Corn | +329.8K | +381.2K | −51.4K |
| Soybeans | +258.1K | +246.6K | +11.5K |
| Bean Oil | +93.5K | +83.6K | +9.9K |
| Soybean Meal | +205.3K | +207.6K | −2.3K |
| SRW Wheat | −28.8K | −22.1K | −6.7K |
| HRW Wheat | +23.2K | +30.7K | −7.4K |
| HRS Wheat | +11.7K | +16.2K | −4.5K |
| Canola | +115.5K | +112.1K | +3.4K |
Contracts, net. As of Tuesday. The WASDE-day move on Friday is not captured here. Oilseeds (soybeans, bean oil, canola) were the only adds. Corn, wheat, and meal all saw selling. Third consecutive week of broad fund reduction outside oilseeds.
U.S. Export & Demand Update
Export inspections
| • | Corn: 1.367 MMT vs. 1.581 MMT. Decent. |
| • | Soybeans: 1.138 MMT vs. 1.156 MMT. Solid and consistent. |
| • | Wheat: 302K MT vs. 337K MT. |
Export sales
China was out on Golden Week. The market is generally quieter when the major international buyer is inactive.
| • | Corn: 897K MT gross (770K net). Not great, but Golden Week. |
| • | Soybeans: 580K MT gross (549K net). |
| • | Soybean cake & meal: 6.3K MT gross (−3.3K net). Second marketing year at 1.085 MMT on rolls. Those are big rolls we like to see. |
| • | Wheat: 456.5K MT gross (452K net). A nice improvement and good to see demand activity at these wheat levels. |
Canada
Canola exports at 248K MT, wheat at 419K MT. Domestic disappearance on canola came in big again at 296K MT, wheat at 164K MT. The weekly crush rate continues to underpin confidence in a 14 MMT+ crush number.
Ethanol: 1.053 million barrels per day, up from 1.007M.
Processor Margins
| • | Canola board: holding at over $327/MT on January. Meal had a $15 run in futures week over week, and the slightly weaker CAD is helping. |
| • | Soybean board: over $2.60/bu on December. A significant jump from last week’s $2.41. Still inverted, with meal doing all the work. |
U.S. Crop Progress & Conditions
| • | Winter wheat: planted at 36% (vs. 46% avg). Emerged 16% (vs. 20% avg). Falling further behind. |
| • | Corn: mature at 83% (= avg). Harvest at 23% (vs. 27% avg), slightly behind. Conditions dropped 3% to 54% G/E, a significant hit that the WASDE chose to go the other direction on with a yield increase. That disconnect is worth noting. |
| • | Soybeans: dropping leaves at 85% (vs. 87% avg). Conditions down 1% to 57% G/E (1% from good, 1% into poor). Harvest at 25% (vs. 33% avg), running behind. |
Western Canada
Dry fields and minimal weather events delivered another strong harvest week. Things have really caught up in Saskatchewan, though some systems moving through the prairies this weekend and into next week may slow the pace.
Saskatchewan
All crops at 82% harvested (vs. 97% five-year avg, 88% ten-year avg). Spring wheat at 88%, canola at 72%. Yield estimates: canola at 40 bu/ac (up from 39), spring wheat at 53 bu/ac (up from 52). The yield trend has been consistently upward in Saskatchewan.
Alberta
All major crops at 77.7%, all crops at 79.5% (vs. 94% five-year avg, 79.9% ten-year avg). Spring wheat at 88.5%, canola at 56.3%. Yield estimates: spring wheat at 53.9 bu/ac, canola at 38.1 bu/ac. Slight bumps in both from the last report.
Manitoba
Harvest at 65%, canola at 74%, spring wheat at 86%.
How We’re Thinking About This
Corn is in a different world after this WASDE. Not just a yield increase that makes this the second largest crop on record, but USDA increasing exports, feed, and ethanol on both sides of the ledger. The biggest question coming in was around feed and exports given what the stocks report showed and how far behind corn exports are to date, and now USDA has increased both. That is a head-scratcher. The carryout at 1.8 billion bushels is not quite as loose as last year, but the stock-to-use is loose, South America has no major issues, and Argentina is being aggressive and pricing in as the cheapest origin. Capturing $5 corn looks pretty far off at this point. We are now trending more toward last year’s price levels than the 2022-23 setup we were looking at before the stocks report. Protect against continued follow-through of today’s weakness through the first part of next week.
The export demand signal is what matters next for corn. If we start seeing flash sales and buyers stepping in, that signals the demand has found a support level against these flat prices. Think about Mexico stepping in at $5 two weeks ago. If we are not seeing that, then buyers believe this price is going further down. And given the fund length that is still on corn, if buyers do not step in, funds will start getting panicked on their long. That is why you see a 30-cent move in a day.
Oilseeds are where the light is, but the risk is energy. The market looks to be targeting a normalization of energy prices through the end of Q1 or into Q2 2027. If that plays out, the war and energy premium that is propping up oilseed prices comes at risk. Refiner margins would compress, the renewable diesel supply swing in this tight diesel market would start fading, and that flows directly into soybeans and canola. On the meal side, Argentina has been very aggressive, keeping prices relatively in check.
Canola: you can check bean oil to know the direction. The correlation has been that tight. With Australia looking fine and exports less of a pull this year, there is greater downside risk under an energy normalization scenario. Protect these values in the financial using futures hedge shorts, put options, and collars. Capture the premium in basis when the flat price moves lower.
What to Watch Ahead
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Sunday night opening: the first signal
If markets open up on heavy volume, physical buyer demand has been found and funds may stay more active with their net long. If we open down with sizable volume, buyers have not stepped in yet and funds are looking to get out, which means prices falling further is a real possibility. Volume is the key: price direction without volume behind it is noise.
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ICE closed Monday for Canadian Thanksgiving
No canola trade on Monday. The Sunday-to-Tuesday setup will be the first real read on how the Canadian market digests the WASDE and what bean oil does in the interim.
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Baltic corridor: the next Black Sea variable
Baltic countries seeking an EU ban on Russian grain trains would remove Russia’s primary alternative to the damaged Black Sea ports. If that goes through, it further constrains Russian grain exports and adds to the conflict premium in wheat.
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Bottom line: The WASDE changed the corn story. A 1.8 billion bushel carryout on the second largest crop on record, with funds still carrying a massive long they need to work out of, means the risk is to the downside on corn until demand shows up. Oilseeds remain supported by energy, but that is the very risk if energy normalizes. Protect what is profitable and position for the basis opportunity on the other side. No one ever went broke making money.
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Ready to review your risk management plan?
With corn repricing and oilseeds still carrying an energy premium, this is the time to make sure your protection is in place. Whether it is put options, collars, or futures positions, our team can walk through what makes sense for your operation right now.
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Have a great week and reach out with any questions.
Stephen
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