The grain trade is seeing a recovery overnight ahead of Friday’s WASDE/Crop Production report after corn has seen a decline for five sessions in a row. After hitting the measured move theory number of 548.6 on Dec corn, a profit-taking cleanse has run its course alongside soybeans, which refused to give up more than $0.19 from their high last week and quickly rebounded from the low made last night. Wheat may have worked out its washout from Monday night’s high on all the rumors that a hoped-for peace accord could get underway between Russia/Ukraine. Algo headline readers have been giddy over this, but the reality is it’s all on hope, which has continued to fail over the past 4.5 years. Russia wants and intends to keep the Donbas and Crimea, while Ukraine wants its territory back. Neither side has moved from those positions, leaving the war likely to continue into the winter.

Friday’s data seem to have everybody focused on yield, with average guesses on corn at 178.4 BPA and soybeans at 52.5 BPA. But what the trade continues to miss is that the structural bull market needs to put just as much focus on the demand equation that has grown because of end-user profitability for multiple years in a row. It’s this continual record demand for US corn and beans, contrary to media headlines, that needs to be focused on. Especially with Ukraine’s loss of production and market share with the Black Sea closed off. Whether it’s corn sales or ethanol exports, we have usage of over 16.2 Bil Bu on average over the past four years that will not just fall away. It is here.

Current expectations for Friday’s corn number have carryout coming in around 1.52 Bil Bu. With record warmth in July, having been the second-highest since 2012, yield loss is apparent heading into the report, but the USDA catching up to demand numbers will also come into play. A carryout number under 1.5 Bil Bu pushes corn toward new highs, especially since investor interest in what is still a cheap commodity valuation has corn seeing new record-high open interest. A potential carryout by the January crop report could see both demand and yield push the carryout down toward 1.2 Bil Bu.

Soybean demand on new crop remains at a record 4.55 Bil Bu and is likely even higher. Biofuel policy this year keeps crush growth at 20-40 Mil Bu into 2028. And with the current US/Chinese purchase agreements, our exports continue to blossom above 1.7 Bil Bu over the next two years. No stock building occurs this year, and a carryout near 200 Mil Bu into the January crop report is in the making. Beans in the teens have occurred, but may have risk if Pres. Trump missteps between now and the September 24 meeting with Pres. Xi, even though higher prices into the fall are still projected. Watch for an adjustment on our soybean hedge recommendation, as we do need to book some beans in the teens ahead of Friday’s data in case of a Black Swan event. Our books are only 15% sold.

Wheat continues to be an algorithm headline joy-fest for volatility. All this market needs to hear is a hint of peace and you get an almost immediate 10% correction. But as soon as Putin says in the headlines, “we are keeping captured territories and will fight to do so”, price values will elevate again. Too much wheat that can normally be sourced from the Black Sea region is being piled on the ground and is unavailable to the world, forcing end-users to find new sourcing from Europe, Australia, Canada and yes, the US. There is no cheap alternative to Black Sea origin with half that wheat cut off from the world likely through the winter.

One bearish aspect to wheat is that moisture does return to a large portion of the Plains where winter wheat plantings for next year can get underway. Still, for now it’s about the world accessing new sources of wheat that will occur at higher prices. Saudi Arabia will have to get used to it (having canceled on Monday and upset with higher tender values), like we have to get used to higher-priced oil.