By
| CONTRACT | CLOSE | NET CHANGE |
|---|---|---|
| Dec '26 Corn | 537 3/4 | +1 1/4 |
| Dec '27 Corn | 529 1/2 | +2 1/2 |
| Nov '26 Beans | 1288 | unchanged |
| Nov '27 Beans | 1248 1/2 | +7 |
| Dec '26 Chi Wheat | 774 | -10 |
| Dec '26 KC Wheat | 838 | -6 1/4 |
| Dec '26 Cotton | 93.14 | +1.76 |
| Crude Oil (spot futures) | 85.66 | +2.26 |
| US Dollar Index (spot futures) | 99.39 | -.27 |
| Dow Jones (spot futures) | 53,251 | -333 |
Daily Glance
Choppy day with lots of news items pointing different directions, ultimately ending with little changed corn and soybeans. Wheat was hit hard out of the gate, reacting to news that President Erdogan (Turkey) proposed a plan that would result in a ceasefire between Russia and Ukraine which would have the added benefit of opening up the grain export shipping lanes out of the Black Sea. Late in the session, traders became doubtful that such an agreement could be reached, helping wheat recover from a peak loss of 28 cents, but Presidents Putin and Erdogan are scheduled to meet tomorrow (timing will be close to the grain market day session open).
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Corn and beans turned negative numerous times as profit taking in these extremely overbought markets makes for such action, but ultimately firmed to end unchanged to slightly higher. The main supportive factors continue to be a bullish weather forecast and the expectation of declining crop conditions to be reported this afternoon.
Outside markets featured sharply higher crude oil (peak gain of 3.39), reacting to increased war intensity between Iran and the US. This, plus a weaker bond market (higher interest rates), pressured stocks where the Dow sank to a six session low. The Dollar Index was modestly lower despite the weaker bond market.
Key Points/Developments
Technicals: Dec corn once again pushed up to a new contract high, ending with a small gain (about 4 cents off of the session high). The bullish technical picture persists, as December corn has now closed higher in 10 of the last 12 days. The next upside target is 545, then 558-560, and 573-575. Support is seen at 532-534, then 524, then 510 to 512. The 50 day average is way down at 474.
Nov beans also made a new contract high before closing unchanged, although in the upper half of a 17 cent range. We see resistance at today's high near 1295, then 1312-1315, and then 1345-1350. Support is seen at 1283, 1278, 1270, then 1250. The 50 day average is down at 1199.
Spreads: The Dec 26/July 27 corn carrying charge spread widened a cent to 22 cents today as some bullish enthusiasm seemed to wind down, but remains far below its peak carry of near 32 cents. Similarly, the Nov 26/Jul 27 bean carrying charge spread widened a big 7 cents today, closing at near 29 cents. It's peak carry was 42 cents back in June.
Weather: TStorm left corn and soybeans at Slightly Unfavorable again today, no change, while winter wheat held at neutral. The next two weeks are now shaping up as potentially the hottest such stretch for both crops in more than 48 years, with a real chance of topping the 1990 record.
Here are their closing comments:
An unusual and strong late-season heat wave dominates the central U.S. into mid-September as upper-level high pressure leaves maximums in the 90s-100s south and west, and 80s-90s north and east. Some t-storms accompany the setup, but generally north and less-so south near the core of heat. At some point, the setup will break down, but unlikely for 10 to 20 days.
Markets/Trading Implications
JUST IN: EPA announcement regarding the expected expansion of Small Refinery Exemptions. The trade has recently seemed to expect the expansions to be granted, which would be bearish soybean oil, but today the bean oil recovered nicely to end 6 ticks higher after being down as much as 118. But the announcement just came out at 3:00 pm and its a bearish surprise.
It is still too early to size up the yield impact from the heat stress and disease reports out of both extreme dry and wet parts of the belt, but as we have been saying, any threat to production should be, and has been, taken seriously given where ending stocks already sit. That uncertainty alone is one more reason we are still not wanting to bet against this rally continuing.
The trend remains squarely higher, although the string of higher days for the composite ags is at an historical extreme, and judging by today's choppiness, some upward momentum certainly seems to be leaking.
That said, a correction at some point would not be surprising, and the EPA SRE announcement described above would certainly seem likely to pull soybeans down tonight/tomorrow.
Other Notes
- Small flash sale today of 159 TMT soybeans to Unknown.
- Reports that China has been a large buyer of Brazilian corn. Corn sourced from Brazil to both China and other Asian destinations remains much cheaper than when sourced from the US.
- Friday's Open Interest in the grains as a whole took a huge jump of 74k contracts, evidence that new longs continue to pour into our markets.
- Today's Crop Condition report indicated that corn's Good/Excellent rating was unchanged at 57%. (Year ago was 69%). Soybeans came in down 2%, now at 58% good/excellent (year ago was 65%). The trade was expecting a decline of 1-2% for both corn and beans.
- Here is just how long the funds are currently. Our first thought when seeing this was "How much longer can funds get now that they are near record long?!". But it important to keep in mind that they have considerably more capital to work with now compared to 2012 levels.
Static Notes
- Commitment of Traders report released today, covering positions through Tuesday, August 25, showed an extraordinary week of fund buying. Corn's net long exploded to about 317,000 contracts, up roughly 136,000 on the week, funds buying about 90,000 new longs and covering another 45,000 of shorts. Soybeans saw a similar surge, net long growing to about 201,000, up 49,000, while wheat's net short shrank to about 14,000, a swing of roughly 12,000.
- That is one of the largest single week fund buying sprees we can recall. Over the reporting week itself Dec corn gained 35 1/2 cents, Nov beans gained 21 1/2, and Chicago wheat gained 21. In the three market days since Tuesday's cutoff, corn has added another 13 cents, beans another 50 1/4, and wheat another 81 1/2, so the buying has kept right on going.
Have a nice evening!
Clayton and Taylor
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