Wheat and corn ended the overnight session trading in a mixed, mostly steady range, while soybeans continued to climb, setting new highs in their recovery trend. Much of the strength in the soy complex was sparked by a sharp increase in export basis yesterday, which signaled improving demand. At the same time, domestic crush margins improved by 13 cents, pushing them back above $2.00 per bushel. It seems the soybean market is beginning to recognize the combination of firm demand and deteriorating crop conditions due to unfavorable U.S. weather. This shift is occurring in a market that is already in need of demand rationing.

Yesterday’s excitement about the EPA has Reuters now reporting that they will announce their long-awaited SR ease (small refinery exemptions) today, which deals with 204 applications that extend back to 2016, which is back to the beginning of the first Trump administration. It is expected that the EPA will approve the SREs that prove financial hardship on a case-by-case basis. Now, what is trying to be determined is whether SRE compensation is provided in cash or RINs will be important. It’s also suggested that the EPA will reallocate SREs to larger US oil companies, which are sure to spark a new series of court challenges. If that dramatic change were to occur, it would require a public comment period, again delaying decisions well into the future. Still, this helped soybean oil reverse recent bearish trends and pressed back up to near the $0.54 value on the December contract.

Crop loss reports are becoming more frequent, particularly in parts of Mid-Michigan, where adjusters are reportedly zeroing out on some corn fields due to drought. Corn quality is also under pressure as instances of fungus and rust continue to rise. While soybean pod counts are high, this does not guarantee that pods will be fully developed. In many areas of the Eastern Corn Belt, drought is intensifying just as moisture needs reach seasonal highs. Agronomists in Michigan suggest that the state’s soybean crop may require as much as six inches of rain to reach maturity, yet forecast models show little chance of that happening.

This blend of worsening production prospects and rising demand comes at a time when market participants hold significant short positions and bearish news is fading. As a result, sentiment appears to be undergoing a much-needed shift—exactly what the market has been lacking. Add to this there were rumors that China may be seeking US offers for beans since they have temporarily pulled out of the Brazilian market causing their basis to fall. COFCO. which is a US grain merchant, could always secure US soybeans that would be undetectable by multinational traders.

This morning, there is dryness across the Central US. The forecast calls for cooling temperatures and dry weather in Maine for the next 5-7 days. Showers are forecasted to return to the Plains and the Western Midwest next week. High temperatures are going to range in the 60s to upper 70s, with lows in the 40s and 50s, creating that “falls in the year feeling”.

The cattle market saw a pause yesterday, even though feeder cattle did bump a new contract high, but did not settle there, as it’s consolidating ahead of this afternoon’s COF report at 2 PM. On feed is at 98%, placements at 91% and marketings at 94%. All are bullish if achieved, and placements would reflect the second smallest ever for July. Negotiated trading of cattle yesterday had dressed in the north at $380-384, while Texas has yet to see sales of any significant volume.

The August Livestock Slaughter report revealed July beef production was off 7% from last year and the smallest July figure since 2016. Cumulative production for 2025 is down 3% from a year ago and the lowest since 2017, but production is expected to fall further behind year ago going into the last four months of the year. The cattle market received friendly news from the finalized EU trade deal, making it easier for meat and shrimp products to go to Europe. This is bullish longer-term for beef, but not likely to see beef exports at our prices in those countries in the short term.