This morning’s grain trade is softer across the board, as the best rain for the Western Corn Belt since June is falling across a broad area. Not everyone is receiving it, but a larger portion of the region is seeing crop-stabilizing rainfall. Deliveries against soybean oil had Cargill issuing 783 contracts. Stoppers included AMBRO taking 657, with Goldman Sachs taking 110.

Soybean oil has been under pressure this past week, with the EPA likely announcing two SRE waivers early next week, along with rumors that another 25 waivers will be granted. We also get the EIA feedstock report today, with soy oil consumption expected to come in near 1.5 billion pounds, which would be a record. ADM’s announcement of another 25 million bushels of processing capacity across four plants shows a multi-decade commitment to continued growth.

The wheat trade staged a pop-and-drop yesterday after Ukraine hit another export port in the Sea of Azov, taking another smaller Russian port offline. In the short term, it is not especially relevant because no wheat is leaving that region through the Kerch Strait under the current restrictions. Systemic traders, the ones I call the vigilante sellers that have no grain, just lots of money, took advantage of the rally and sold it back down, as end users are not chasing the current strength. They truly believe they can get bailed out again, as they did in May 2022. The real question is how long until the larger ports are targeted? Russia is launching missiles and drones near NATO territory, with one reportedly landing in Poland yesterday, a NATO member, as it attempts to demonstrate its ability to strike farther and damage Ukrainian infrastructure. Once we get into August, the reality of no truce and no UN assistance should force wheat buyers to seek alternative supplies. Warehouse inventories are low, and countries don’t want hungry populations.

French corn ratings continue to decline, with Good to Excellent now down to 34%, the lowest rating in 15 years. The European corn crop has already lost nearly 10 MMT from early-season expectations. There is growing belief that production could ultimately fall closer to 45 MMT. European corn buying is inevitable; it’s simply a matter of where that demand is directed. There is no way the US does not capture a meaningful share of it. The USDA is too low on its US new crop export projection. It has exports down 325 million bushels from last year’s estimate, which itself likely needs to be raised by at least 50 million bushels. With US corn still competitively priced, why would exports decline? It’s not as though corn has rallied to expensive levels.

Crude oil is sharply higher this morning as Houthi threats to shipping through the Red Sea add another layer of concern. Oil prices are moving back toward the week’s highs as the market heads into another weekend goodof uncertainty. Oil movement through the Strait of Hormuz remains restricted, US supplies continue to tighten, and no solution has emerged to reverse the situation. An inflection point is coming where prices will once again have to move higher to ration demand, while fertilizer concerns continue to build as global supplies remain at risk.

Here we are at the end of the month, and as I stated in mid-July, the last half of July has historically been notorious for beating down grain rallies. This week has been no exception, with all three grains, including wheat, repeatedly finding reasons to rally only to have those moves capped. Historically, a washout low often develops by early next week, setting the stage for a new demand-driven rally. The August 12 WASDE report will be watched closely for any reduction in prevented planting acreage, which may have been significant in the Eastern Corn Belt. Until then, the market is still largely trading paper yield estimates.