August Ends With Bulls Still in Control

August ended with a back-and-forth two-sided trade for corn and beans while wheat was solidly lower on reports that Turkey is acting as an independent third party to help negotiate a Black Sea export corridor. Other than the Turkish President meeting with President Putin this week, the other news did not change over the weekend as the late summer US weather will remain brutally hot and dry through at least mid-September and the US crop will not finish under the favorable conditions expected just two-weeks ago. Another flash bean sale was announced this morning, and crop conditions are expected to fall further in this afternoon’s update which shows that bullish factors continue to be both on the demand and the supply sides for the markets.

News and Notes:

• The US forecasts remain consistent for the next 7-10-days with searing record heat for the southern part of the Corn Belt and Delta with little rain for any part of the Corn Belt. The heat and dryness will push maturity to the detriment of yield. The fear of record yields before the August USDA report has vanished with private analysts doing more surveying and scouting ahead of the September yield update. The markets seem to be trading yield cuts toward 178-180 for corn and 52-52.5 for beans. This is a brutal end to the growing season. The extreme heat and drought will also negatively effect sub-soil moisture for fall field work and planting conditions for the winter wheat crops.
• The Dec corn, Nov bean and Dec cotton contracts all made new contract highs today as the speculative buying and diminished farmer selling have allowed all three markets to continue to move higher as the crops shrink and the charts look strong despite being overbought. The Dec corn monthly chart is on Page 2 which only adds to the overall corn market strength as the daily, weekly, and monthly charts exhibit significant breakouts with no signs of slowing down. December corn gained 73 ¾ cents in August for the largest monthly gains since April 2021 when it exploded to a $1.09 monthly gain on record post-Covid demand and a poor SA crop. Both highlighted in the blue boxes. Funds are now long about 1.8 BBU with US ending stocks potentially falling to 1.7 BBU if yield falls under 178.
• Crude oil and diesel were sharply higher again today as the US fired on Iran rocket launching sites and President Trump announced that the US plans to refill the US Strategic Reserve with barrels from Venezuela. The Straits will remain closed to normal traffic as will the Black Sea. Despite the rumors and efforts for diplomatic resolution for both wars, there is no end in sight as all fours sides have dug in with little room to back up without admitting some level of defeat. Egos are at the root of these wars.
• All six standing Sales Targets were hit last week, and the updated totals are on the table on Page 2 along with the move to put all crop year’s Sales Targets to On Hold. The November ’27 bean target was hit in Friday’s rally. Another corn call re-ownership trade was rolled up to take risk off the table but keep upside intact. This is the most interesting bull market we have seen since late 2020 into the first half of 2022.

What an August! Dec corn rallies 73 ¾, Nov beans rally $1.00 1/2, Sep wheat rallies $1.34 ¾ (WOW) with another impressive market performance from Dec cotton with $11.35 gains which is just behind April’s $12.20 rally. The Commodity Group Research index (a basket of most of the major raw material markets) has now rallied four straight months and closed just below the 4-year closing monthly high. Rising energy and food prices are fueling the rally despite the sharp losses in the meats. Inflation is a real thing that is not just being caused by the closure of the Stratis, but a poor northern hemisphere growing season. The funds will continue to be buyers of our markets while the fundamentals and technicals are supportive, knowing that the development of a Super El Nino will make for unpredictable southern hemisphere weather this winter just when the world needs all major producers to grow at least trend line yields. Volatility with an upward bias remains the trend.