We kicked off the day with NFIB Business Optimism Index at 5:00 A.M., PPI MoM & YoY, Core PPI MoM & YoY, and PPI Ex Food, Energy, and Trade MoM & YoY at 7:30 A.M., Redbook YoY at 7:55 A.M., Fed Bostic Speech at 12:15 P.M., and API Energy Stocks at 3:30 P.M.

Analysis of USDA’s August WASDE is bearish of corn and supportive of grain markets, which are expected to form lasting lows by the end of August. The soybean market must work to curtail 2025 US seedings – assuming normal South America weather between Nov and Feb. Available Midwest area does make it easier to keep US corn supply & demand balanced, but unlike soybeans the US corn market is well positioned to dominate feedgrain trade until newer South American crops are harvested next spring and summer. The long-awaited August crop report has come and gone. Ag Resources (ARC) expects more attention to be paid to firm and rising non-US-exporter corn fob premiums. Spot basis in Ukraine on Monday is quoted at $1.49/Bu over CBOT futures, vs. $.40 over in late June. Nearby Brazilian premiums are quoted at $1.00-$1.15 over, vs. $.75-$.85 over a year ago. US Gulf corn is cheap at just $.80=$.85 over. The lack of US corn production expansion – due to lost acreage – along with brightening export potential warrant end user coverage on breaks during the remainder of August.

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Ag Resources (ARC Analysis of USDA’s August WASDE:

WASDE corn data largely matched expectations, but importantly a larger than expected yield does little to boost end stocks. US harvested corn area was trimmed 700,000 acres. New crop carrying stocks were lowered 10 Mil Bu. Total new crop consumption was raised 60 Mil Bu. 24/25 corn end stocks at 2,073 Mil Bu were down 24 Mil Bu from July. ARC maintains a national US corn yield of 180.5 BPA. Note the NASS’s August forecast is based heavily upon survey & satellite data and ARC views NASS’s forecast in MN., NE, and SD as a bit overstated. Additionally, changes from Aug-Sep lack a historical trend – in 55% of years yield lowered from Aug to Sep; in 45%of years yield is increased. ARC also reiterates US corn is the world’s cheapest feedgrain through Dec/Jan. Competition for large but finite US supplies implies Dec is undervalued below $4.00. A normal seasonal recovery places spot CBOT at $4.60-$4.85 in winter. The USDA’s Aug WASDE was void of new bearish input. Also, the world balance sheet also tightened slightly amid downgrades to old crop Argentine production and new crop production in Ukraine. USDA projects 24/25 world corn stocks at 310 MMT’s, vs. 312 in July and vs. 309 in crop year 2023/24.

It remains that the build in stocks globally and in exportable positions has been unremarkable in recent years. Unlike 2016-2019, the global corn market isn’t oversupplied and there’s a need for favorable weather & trend yields in South America in 2025. 2024/25 exporter stock/use was lowered fractionally. ARC projects 24/25 exporter corn stocks/use to be cut further amid additional production cuts to Ukrainian & Russian production. Note that 24/25 exporter stock /use of 9.3% assumes normal South American weather in winter and spring of 2025. Rallies are still selling opportunities as corn steals 25/26 acreage from soybeans above $4.50 rather easily. But risk leans to the upside into Dec/Jan, when more is known about La Nina’s evolution and its impact on weather in Argentina & Southern Brazil. Total US corn demand in 24/25 will exceed 15 Bil Bu. CBOT futures are lower on carry through selling from Monday’s bearish USDA soybean stocks estimate and record high yield US summer row crop potential. Soybean futures fell to a new 4-year low which pressured grains. Corn and soybean Crop Condition report came in unchanged from last week.

More By This Author:

All Important USDA August WASDE. The Corn & Ethanol Report
Exports And Weak Competition. The Corn And Ethanol Report
Bushel Per Acre And Crunch Time. The Corn And Ethanol Report