Good afternoon. Higher closes were seen in the ag space on WASDE Tuesday, with corn futures leading the group to the upside on a percentage basis due to friendly report data that allowed buying to spill over into the other markets. Key going forward will be whether this buying is sustainable, as corn futures are right up against resistance recent resistance, and soybean futures are flirting with the downtrend line started in late May.

CH closed at 4.49 on Tuesday, up 7 1/4. CK was up 7 1/2 at 4.55 1/4. SF closed at 9.94 3/4, up 4 3/4. SH was up 4 3/4 also at 10.00 1/4. Inside day for both. WH closed at 5.61 3/4, up 3 cents. Products were mixed, January soybean meal closed at 292.0, up $2.40/ton, and January soybean oil closed at 42.72, down 8 points. Livestock markets were mixed, February live cattle closed at 189.02, up $2.00, January feeders closed at 257.32, up $1.52, and February hogs closed at 84.57, down $1.92. Outside markets are mixed, crude oil futures are trading either side of unchanged, the Dow Jones index is down 50 points, and the US$ index is up 30 points. The S&P500 is down 15 points and the NASDAQ is down 95 points.

Spreads were mixed, corn spreads were down a penny to up 5 cents, and soybean spreads were down a quarter of a cent to up a penny. CZ/CH closed at -8 1/2, down 3/4 of a cent, and SF/SH closed unchanged at -5 1/2. CZ/CH again traded to the recent high of -7 1/4.

Market excitement coming out of the report was focused on the corn market Tuesday, as this was by far the most bullish commodity of the three (beans and wheat). USDA raised demand more than expected - exports were increased 150 mil bu and ethanol was increased 50 mil bu - which in-turn dropped ending stocks 200 mil bu to 1.738 bil bu and dropped stocks/use to 11.4%. Of note, this ending stocks figure is down 17% from the July estimate of 2.097 bil bu. For soybeans, there were no changes to the balance sheet from last month which leaves ending stocks at 470 mil bu and stocks/use at 10.8%. Notably though, the average farm price forecast was lowered another 60 cents from last month to $10.20/bu, depite the lack of supply or demand changes. US wheat ending stocks were seen 20 mil u lower at 795 mil bu due to a 25 mil bu increase in the export forecast that was partially offset by a 5 mil bu reduction in imports. Other points of interest on the US side of the report include in the soy products, where soybean oil exports were increased 500 mil lbs (nearly double) to 1.100 bil lbs (499k tons); of note, current commitments for the year stand at just over 416k tons, which means if the current pace continues, this number could be further adjusted higher in the future.

At the world level, corn ending stocks came in well below the lower end of the average trade guesses at 296.44 mmt's. World soybean stocks were seen at 131.87 mmt's, and world wheat ending stocks came in at 257.88 mmt's. In South America, production estimates were unchanged from last month for both Argentina and Brazil corn, while Brazil soybeans were also left unchanged, and Argentine soybeans were adjusted higher by 1 mmt to 52.0 mmt's. Other global adjustments of note included a 2 mmt reduction in Chinese corn imports, as well as 1 mmt reductions in the wheat export forecasts for both the EU and Russia; EU wheat production was also slightly lowered. To view our full USDA report recap that includes both US and world numbers, please click here.

The corn balance sheet is no doubt more bullish than it was 6 months ago, but a lot of that depends in part on what happens with Trump's proposed tariffs on the US's largest corn buyer, Mexico. We see no reason to argue the USDA's adjusted export forecast today, but the possibility exists for possible future reductions to this number should either A) those purchases already on the books begin to get canceled, or B) purchase pace by global buyers dramatically slows the back half of the marketing year due to a front-loading of purchases in preparation for the afore mentioned tariffs. And in soybeans, the picture didn't necessarily get any more bearish this month, but global stocks/use at nearly 35% is by no means bullish. The next data update looks to come early Thursday morning, as Conab will give new updates on corn and soybean production estimates in Brazil.

Weather forecasts for the US were again mostly unchanged through mid-day on Tuesday, as models continue to see several rainfall chances for the southeast and mid-south and up into the northeast over the next 5-10 days. Rainfall favors areas further to the east the rest of this week and into the weekend, while moisture works further to the west beginning early next week. 10-15 day guidance continues to fluctuate, as there remains very little agreement between the models; The CPC and EU ensemble are wet in the PNW and also in Texas but dry elsewhere, while the EU AI is dry in the PNW and wetter in the south and also the southeast. Confidence beyond a week remains low. The short-term temp outlook continues to be well-advertised, as another brief cold spell is seen moving out of the north tonight/tomorrow and lasting through the end of the week before temps again return to above average.

Also little update in South America, as the forecast here remains near-ideal broadly speaking. The rest of the week looks to feature normal rains throughout most all of Brazil, with some small local areas of heavy rains, while Argentina sees the chance for heavy rains in the far north, but just light/scattered precip through the remainder of the country. No extreme heat is noted anywhere in either country, which keeps crop stress nearly non-existent.