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Happy Friday,
Saudi infrastructure attacks sent crude briefly to $105 before pulling back, China’s crude futures spiked to $129, StatCan released their crop estimates, and soybean flash sales activity dropped to nearly nothing. Meanwhile, Western Canada’s overnight lows have finally broken through the freezing threshold and frost risk is now top of mind against a harvest that’s barely halfway done. Here’s everything that matters.
How the Week Closed
| Commodity | Weekly Change |
| Corn (December) | −2.25¢/bu |
| Soybeans (November) | −7¢/bu |
| Canola (November) | +$4.00/MT |
| Spring Wheat (December) | −3.25¢/bu |
| Hard Winter Wheat (December) | −14.75¢/bu |
| Soft Red Wheat (December) | −11¢/bu |
| Crude Oil (front-month WTI) | −$5.91/bbl |
| Heating Oil (ULSD) | −13¢/gal |
Canola was the lone green print. Energy gapped about $4/bbl lower on the Thursday-to-Friday session after Saudi Arabia stated the pipeline fixes wouldn’t take long and contracts should be fulfilled.
USD index at 100.22 (firmer w/w after the Fed raised rates a quarter point, pushing the 10-year over 5%). CAD/USD at 1.40, weaker w/w on the rate differential.
What Drove Markets This Week
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Saudi infrastructure attacks, then a reversal
Attacks on Saudi oil infrastructure pushed crude to about $105/bbl, and rumors that September Saudi contracts wouldn’t be fulfilled added fuel. China, which had been largely absent from the energy markets before summer and only recently returned, saw its crude oil futures spike to $129/bbl, well above the prior peak of $121.80 at the start of the Iran conflict.
Energy has since pulled back. Saudi Arabia stated that the pipeline damage requires fixes that are neither significant nor long-duration, and they expect to fulfill contracts. The $4/bbl gap lower on the Thursday-to-Friday session reflected the market pricing in that reassurance.
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StatCan crop estimates
Canadian total wheat production is down almost 11% year over year to 36.1 MMT, on lower harvested area and lower yield, with spring wheat yield at 55 bu/ac.
Canola production is expected down just 0.8% year over year to 22.1 MMT on a lower yield of 41.8 bu/ac but a higher harvested area of 23.2 million acres (99% of seeded). The market had largely expected year-over-year drops given last year was a record, so the numbers weren’t a shock.
We’re flagging one thing: StatCan is factoring in only a 1% harvest loss. Given the slow harvest, continued rain, very wet areas, and frost temps now arriving, 1% seems low. That’s just our opinion, but it’s a number worth watching closely as harvest progresses and final delivery data comes in.
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U.S. NOPA soybean crush came in at 205.5 million bushels for August, about 5% below July but up 8% year over year. That said, the number missed expectations that were sitting around 211 million bushels.
Flash sales nearly dried up. After weeks of consistent large-scale Chinese buying, the only announcement this week was a 110K MT soybean sale to China on Friday. That’s a significant drop in activity and was adding to the downward pressure on beans.
Fund Positioning: CFTC Managed Money
Most products were relatively status quo this week. The real moves came from the soy complex: funds sold soybeans, added to bean oil, and added significantly to meal. SRW keeps getting whipsawed, flipping from net long back to net short in a matter of weeks.
| Contract | This Week | Last Week | W/W Change |
| Corn | +414.5K | +414.5K | Unch. |
| Soybeans | +241.5K | +257.3K | −15.8K |
| Bean Oil | +101.5K | +91.7K | +9.7K |
| Soybean Meal | +183.1K | +157.7K | +25.4K |
| SRW Wheat | −3.7K | +4.9K | −8.5K |
| HRW Wheat | +44.4K | +48.7K | −4.3K |
| HRS Wheat | +22.2K | +22.3K | −150 |
| Canola | +110.8K | +110.8K | Unch. |
Contracts, net. Corn and canola flat. The soy complex is where the repositioning is happening: out of seed, into meal and oil. SRW flipped back to net short after just one week long.
U.S. Export & Demand Update
Export inspections
| • | Corn: 1.52 MMT vs. 1.675 MMT. Solid. |
| • | Soybeans: 673K MT vs. 465K MT. A big week relative to the recent months. Inspections are backing up the export sales pipeline. |
| • | Wheat: 457K MT vs. 431K MT. A slight improvement and not a bad number for wheat. |
Export sales
| • | Corn: 1.158 MMT gross (1.027 MMT net). |
| • | Soybeans: 1.709 MMT gross (1.702 MMT net), well ahead of this time last year. That tight gross-to-net spread tells you cancellations are minimal and commitments are firm. |
| • | Soybean cake & meal: 60K MT gross (24K net). Second marketing year at 201K MT. |
| • | Wheat: 368K MT gross (328K net). Nothing to write home about. |
Canada
Canola exports came in at zero metric tons this week, while wheat was at 483K MT. Domestic disappearance on canola saw a setback at 238K MT (down from last week’s 295K MT), wheat at 128K MT.
Ethanol: 1.099 million barrels per day, flat week over week.
Processor Margins
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Canola: holding, meal-driven
Board crush over $308/MT on November and over $305/MT on January. Meal continues to be the primary driver of board crush margins these past weeks, and the weaker CAD is also supportive. The margin trajectory over the past six weeks ($286 → $305 → $320 → $300 → $308 → $308) has been volatile but consistently strong.
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Soybeans: inverted board margin out to new crop
Board crush at $2.22/bu on October and $2.36/bu on December. Apart from October to December, the board margin is inverted all the way out through new crop next year, which signals that demand is expected to remain front-loaded across the entire forward curve.
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U.S. Crop Progress & Conditions
Spring Wheat
Nearly done at 93% harvested, right on the 92% five-year average and even with last year.
Corn
Dented at 86% (84% avg), maturity running ahead at 43% (38% avg, 39% LY). Conditions ticked up 1 point to 57% good-to-excellent (vs. 67% last year), the first weekly improvement in several weeks. The category detail: 2% moved into good, sourced from 1% out of fair and 1% out of excellent. The middle of the distribution is consolidating. Corn harvest at 8% vs. 6% average and 7% last year, though the week-over-week pace actually slowed relative to the five-year average.
Soybeans
Dropping leaves at 44% (37% avg). Conditions unchanged at 58% good-to-excellent (vs. 63% last year) with no category shifts. Harvest has started at 6% vs. a 3% average and 5% last year.
Western Canada
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Frost is here. Harvest is not.
Overnight lows have now broken through freezing across the majority of Saskatchewan, with areas seeing temps down to negative single digits and zero. Frost risk is now the primary concern against a harvest that advanced just 5% week over week.
Saskatchewan topsoil moisture: 34% surplus, 63% adequate, just 3% short. No major change from last week as rains over the weekend and into the start of this week kept those numbers propped up. We are now well into the third week of September.
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Saskatchewan
All crops at 32% harvested vs. a 71% five-year average and 63% ten-year average. Spring wheat at 17%, canola just over 15%. The wheat harvest rate actually slowed while canola picked up. Also worth noting: only 18% of barley is grading malt vs. a 31% ten-year average. That will increase the feed barley supply, although downgraded malt may still have value for FAQ sales.
Alberta
All major crops at 22.8%, all crops at 23%. Spring wheat at 20.8%, canola at just 4.4%.
Manitoba
Running further ahead at 40% overall, canola at 36%, spring wheat at 70%. A big jump on both main crops week over week.
How We’re Thinking About This
Corn held support levels into the close and funds are still somewhat friendly on the fundamentals, even though they had no change to their net position this week. South American trade is pricing in cheaper on export, which is a headwind. The flag here: funds are sitting on such a massive net long that a major input is really needed to push this higher. If that doesn’t materialize, a rush of fund exits could crash prices quickly given how large the position is. Be mindful of that risk.
Wheat keeps whipsawing, but the underlying situation hasn’t changed. Russia and Ukraine’s logistics issues are still trapping supply versus what they’ve historically shipped through September. It looks like demand is trying to hold off for cheaper product from those origins for as long as possible. The question is: when does demand have to accept that the supply simply won’t be there? If we see more September and October capacity loss, that’s where things get really interesting. Personally, we think we could see another pop if there’s no positive news from the Black Sea region in the next one to two weeks.
Meal is running the crush margin on oilseeds. That’s been the story for the past several weeks, and it’s showing up in both the fund positioning (meal +25.4K this week) and the export sales commitments. If we start seeing a slowdown in meal commitments, that will be one of our major signals of a pullback in the demand outlook, and what would drive us to get more protected on beans. Beans in the teens is a good area to stay protected.
Canola is a balancing act right now. Australian production is looking better, and while there’s still dryness, it’s not showing to be a major production setback at this time. StatCan’s 1% harvest loss is hard to agree with given conditions on the ground, but the yield around 41 bu/ac is looking more realistic. We’re more comfortable protecting at any pops in canola from here.
What to Watch Ahead
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Western Canada: harvest rate vs. premiums
Modern combines have improved efficiency enough to minimize the impact of a slower-than-average harvest pace, but the rate still matters for what commercials are willing to pay for spot product. Here’s the dynamic: if a grower planned to be 25-30% sold and a premium shows up that pushes them to 35-40%, that sale was supposed to happen in December or January. It changes the flow, the hedging activity, and the overall psychology of selling for the coming weeks and months. The opportunity may be more in basis than in futures right now.
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Russia and Ukraine: same story, same risk
A broken record, but significant. There’s still both opportunity and risk at these levels. If you can stomach the short-term moves, we think there could be another pop without positive Black Sea news in the next week or two.
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Meal commitments as a demand signal
Meal has been driving crush margins for weeks. Any slowdown in meal export sales commitments is the early warning of a demand pullback on the oilseed complex. Watch that number closely.
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Bottom line: Energy volatility dominated the headlines, but for the ag complex it was a week of modest moves and shifting dynamics. Flash sales dried up, SRW flipped short again, and the fund corn position is getting large enough to become its own risk. In Canada, frost is now reality and harvest is barely a third done. The opportunities are in the basis, in the premiums, and in being positioned before the market accepts what the supply picture is actually telling it. 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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