Daily comment for Friday, September 4

The selling traced mostly to profit taking off a rally that has now run for three weeks, with the Black Sea doing the rest of the work. Word that US envoys will visit Moscow and Kyiv this weekend in a renewed push for a ceasefire pulled longs out of wheat, and wheat dragged the rest of the complex along with it.

Ahead of a three day weekend, and with the September crop report waiting on the other side of it, there was little appetite to add risk. Volume thinned as the session wore on and the trade largely settled into a wait until Tuesday posture.

Outside markets saw the Dow give back big gains early to close sharply lower while Crude chopped back and forth to close slightly higher.

Key Points/Developments

Technicals: Dec corn eased 4 cents to finish at 536 3/4, its third straight lower close since Tuesday's 546, which leaves it within a quarter cent of where it started the week after never once threatening the downside. Nov beans slipped 6 1/2 cents to 1309 3/4 and came through the week in far better shape than corn did, still holding better than 20 cents of the gain.

Chicago wheat did the damage, down another 20 1/4 cents to 734 and now off 48 1/2 cents in three sessions, with KC wheat holding up somewhat better in relative terms. That takes Chicago back to levels last seen before the late August surge.

Spreads: The Dec/Mar corn spread widened another quarter cent to roughly 15 1/2, extending a run we have been pointing out for over a week now. The Nov/Jan bean spread was unchanged at about 15 1/4.

Yield update: S&P Global put the 2026 US corn yield at 180 bushels per acre and soybeans at 52.6, and also trimmed harvested corn acres by 400,000. That works out to a corn crop of 15,895 million bushels, down 118 million from August and 1,126 million from last year, and a soybean crop of 4,516 million bushels, down 3 million from August but up 254 million from a year ago. Both of those yields sit slightly above what the market has been trading, which is worth keeping in mind ahead of next Friday.

Weather: TStorm left every rating unchanged again today, corn and soybeans still Slightly Unfavorable and winter wheat Neutral. The ridge of high pressure holds across the Central US into September 15, keeping heat and below normal rainfall over the Plains, the southern two thirds of the Midwest, and the Delta for the next 14 days.

The notable shift is directional. Yesterday's extended range run had retrograded that ridge to the west, which would have opened the door to showers and cooler temperatures, and today's run reverses that and extends the heat and dryness instead, pushing crop maturity along at the expense of yield.

The Northern Plains and Upper Midwest are the exception, at risk of ridge riding storms with localized flooding possible across North Dakota, Minnesota and the Canadian Prairies, where 10 day rainfall totals run 3 to 6 inches.

Markets/Trading Implications

Today was a positioning day more than anything else, a quiet end to a week that had plenty of movement in the middle of it. What stands out to us is the timing of the fund data, since the length being reported is measured as of Tuesday, which was the high of the move, and the market has traded lower in all three sessions since. That does not mean the rally is finished, but the record position everyone will be talking about this weekend is being measured at the top rather than where we actually sit today.

Next Friday is the real event. The September crop report gives us the first objective read on yield, and the private estimates that have come in this week are still running higher than where the trade has been pricing this crop. A heavily long fund position going into a report that could either confirm or break the yield story is exactly why we would rather not add new risk ahead of a long weekend.

One thing we would still act on: corn's Dec/March calendar spread widened again today and has now done so for the better part of two weeks. We continue to think this is a good window to roll December corn sales or hedges out to deferred months, before that spread has a chance to tighten as we move toward year end.

Every situation is a little different, so give us a call and we can talk through where you stand.

Other Notes

• For the week, Dec corn gained 1/4 cent, Nov beans gained 21 3/4 cents, Chicago wheat lost 50 cents, and cotton lost 5.03.
• The USDA announced another 250,600 metric tons of soybeans sold to an unknown destination, likely China. That puts China at an estimated 11.5 to 12.0 million metric tons of US beans secured, roughly halfway to the 25 million metric tons it pledged to take by the end of December.
• The UN's Food and Agriculture Organization reported world food prices at their highest level since late 2022, and cut its 2026 world cereal production forecast by 3.4 million metric tons to 2,980 million, the smallest harvest since 2018.
• China confirmed it will bring a delegation of CEOs when President Xi visits the US on September 24, with agriculture and non tariff barriers expected to be on the table.

Static Notes

• Commitment of Traders report released today, covering positions through Tuesday, September 1, showed funds still adding aggressively. Corn's net long grew to about 431,000 contracts, up roughly 55,000 on the week, funds buying about 28,000 new longs and covering another 27,000 of shorts. Soybeans' net long grew to about 241,000, up roughly 43,000, while wheat flipped from a net short of about 14,000 to a net long of about 15,000, a swing of nearly 29,000 and its first net long position since late April.
• Over the reporting week itself Dec corn gained 22 1/2 cents and Nov beans gained 80, so that buying came into a market that was already climbing hard. In the three market days since Tuesday's cutoff, though, corn has given back 9 1/4 cents, beans 8, and Chicago wheat 48 1/2, which means all of that reported length is measured within a few cents of the highs of the move.

Have a great weekend!

Clayton and Taylor

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