Corn Market Update

? Prices:

• December Corn (CZ): $4.29 1/2, up 6 1/4 cents
• March Corn (CH): $4.47, up 6 cents
• December/March Spread (CZ/CH): -17 1/2, up 1/4 cent

? Market Headlines:

• December corn futures traded to their highest level in more than two months on Tuesday, with prices settling back above the 100-day moving average and also probing into the open chart gap area left from the July Fourth holiday weekend.

• Early yield reports continue to be highly variable across the Midwest, though generally speaking, we've heard a lot of talk of 10-20 bu/acre less than last year. Moisture has also been variable, but hot/dry weather the last couple weeks seems to have really sped things along in most areas.

Summary:

The USDA added nearly 75 mil bu in production in its report last Friday and corn futures have done nothing but continue to work higher ever since, which has been a positive development for the bulls amid the start of harvest. While we don't see the short term uptrend as being in any sort of jeopardy, we would express a bit of caution over chasing the market straight up, as rallies will more than likely be hit with farmer hedge selling if Dec futures can make it into the 4.40-4.50 area. Yields seem to be down from last year, but the big question at this point is whether they'll be down enough to produce any sort of significant price rally, with most privates even on the lower end of estimates still seeing a yield figure that would be a new all-time record. Keep in mind also that the planting of some 99 million acres alleviates some of this pressure right off the top, and will add to the overall production number.

Soybean Market Update

? Prices:

• November Soybeans (SX): $10.49 3/4, up 7 cents
• January Soybeans (SF): $10.69 1/4, up 7 1/2 cents
• October Soybean Meal (MV): $285.80, up 60 cents/ton; inside day higher
• October Soybean Oil (LV): 52.69, up 0.93 cents/lb
• November/January Spread (SX/SF): -19 1/2, down 1/2 cent

? Market Headlines:

• The US EPA on Tuesday announced a 45-day public comment period on a plan to likely reallocate either 50% or 100% of the biofuel blending requirements that were previously waved under the SRE rulings. A 100% ruling would be a win for the US farmer, will a 50% ruling would be seen as a way to try and appease both the farm and oil industries.

• However, the proposal is not limited to just those two outcomes, as the EPA is also taking comment on reallocations of other percentage levels like 25% or 75%, and is also still considering reallocating none of the exemptions according to today's announcement.

• Brazilian soy crush group ABIOVE on Tuesday said they see soybean production in Brazil this year at 170.3 MMTs, which is unchanged from their previous estimate. The group also raised crush by 0.4 MMTs to 58.5 MMTs.

Summary:

The soy complex saw two-fold buying on Tuesday, with the EPA announcement and preceding rally in bean oil being partly responsible for the day's buying, and ongoing optimism regarding a Trump/Xi meeting later this week accounting for the other part. We want to have optimism that there will be something related to ag come out of the phone conversation between the two, but the facts just make that hard to believe at this point; Chinese buyers are covered at least through October and into November is problem number one, and that they've continued to buy more expensive South American supplies well into the window when they'd typically switch to the US is problem number two. We continue to see demand as overstated, and a further kicking of the can down the road on Friday would do nothing but further illustrate this.

? Prices:

• December Chicago Wheat (WZ): $5.34, up 9 cents
• March Chicago Wheat (WH): $5.51 3/4, up 9 cents
• December/March Spread (WZ/WH): -17 3/4, unchanged

? Market Headlines:

• A French wheat farmer group on Tuesday urged the European Union to raise its floor price for cereal exports from the current level of around 100 Euros to 170 Euros in an effort to help farmers after good production has pushed prices to five-year lows. If enacted, this would be the first change to what is know as the intervention price in the last 25 years.

Summary:

Aside from a further rallying of wheat values in Europe, we have little new to point to again on Tuesday as reason for Chicago futures closing higher for their fourth consecutive session. Perhaps seasonals are beginning to kick in, with a post-harvest low having potentially been scored last week. Headlines regarding Asian buyers switching purchases to the US are also positive, but we don't see this being new to the market the last few days and causing the brief uptrend.

In Other News

• Livestock markets saw a classic turn-around-Tuesday session, giving back a portion of yesterday's gains in all three markets:
• October live cattle: $233.45, down $1.15; inside day lower
• October feeder cattle: $354.30, down 20 cents
• October lean hogs: $97.37, down 15 cents; outside day lower

• Outside markets saw another day of mixed trading on Tuesday:
• Crude oil futures: up $1.10-1.20/bbl
• Stock index futures: The Dow Jones index is down 120 points, the S&P500 index is down 10 points, and the NASDAQ is down 20 points
• US $ Index: down 50-60 points

• President Trump posted on Truth Social on Tuesday that he had a "wonderful phone call" with his friend Narendra Modi, Indian PM, in which he wished him a happy birthday. Trade talks between the two sides have been ongoing amid Trump's for allies to increase sanctions on Russian oil buyers.

Weather Outlook

? Short-term Forecast:

• Thunderstorm activity looks to pick up across the northern Plains and northwestern Midwest through the night tonight and into tomorrow, with the EU forecast continuing to see generally 1-3" for parts of the Dakotas and NE between now and the end of the weekend. The models see rains making it slightly further east than was seen yesterday, but totals will be notably better west of the Mississippi.

• Again nothing new on the short term temperature forecast for Tuesday, as models continue to see no sign of warmer than average air abating into the back third of the month. There looks to be a small pocket of cooler air in the central US the back of this week, but overall, most of the country looks to continue seeing above average warmth.

? Extended Forecast:

• The European AI model in the week two period is notably wetter in the eastern US than was seen yesterday and also compared to either the EU or GFS models, which is keeping our confidence low. Otherwise, the PNW looks to stay wet into the period, while the northeast looks to be the driest area of the US.

• 10-15 day temperature outlooks this afternoon see cooler air working back into western Canada and the far northwestern US by the first of October, but have kept the eastern US generally warm again for another day.