The grain trade is rushing higher this morning, with corn scoring new contract highs for the year and dragging everyone with it. Corn, beans, and wheat dipped initially overnight when the grain trade got underway, as crude oil declined late yesterday afternoon following an announcement that a truce is again in place between the US and Iran to address nuclear issues and open the Strait of Hormuz more freely. But after the initial dip, the realization that the US CIA envoy into Russia failed to produce any interest in ending the back-and-forth strikes on export infrastructure between Russia and Ukraine proved supportive, and the grain trade resumed its upside momentum.

Late yesterday, we saw managed money return to buying, giving us support into the close. The market’s attitude is starting to shift, with more analysts predicting lower US yield potential. More traders now want confirmation that US yields will not decline, given the recent drop in ratings and ongoing drought stress. The results of the Pro Farmer Crop Tour indicated lower yields, but before long we will see harvest activity, and that is what the trade is waiting for. There is also more talk about test weight this year, specifically on corn. A few analysts have trimmed the US soybean yield by as much as 2 bushels, which would cut new-crop ending stocks roughly in half. Futures are starting to reach overbought levels, though, and this is creating choppy trading. Cash markets remain strong, but buyers are anxiously awaiting new-crop inventory.

The fear that China may step away from buying soybeans due to the Iranian sanctions, of which China is the most prominent buyer, is being reduced by China’s exclusion from the US “D-Day” sanction protocol set forth. Meanwhile, Pres. Xi is still scheduled to come to the US for the summit on September 24. Excluding China shows the US wants to move forward and continue expanding trade relationships again. This is solid for agriculture after experiencing such a rough run in the prior crop year.

Wheat buyers out of the Black Sea are now starting to seek other sources, with Tunisia tendering for 125,000 MTs of world wheat, along with barley, for mid-September through mid-November delivery. The Danube River is trying to absorb some of the lost Black Sea routing of Ukrainian grain and is now seeing a backup of around 70 vessels due to low water levels from the European drought, causing congestion because of lower draft rates. We will start to see EU grain sales pick up, most notably wheat from France and Germany. Wheat is fungible, so as French milling wheat rises in price, it supports US values on a spread basis, keeping our exports from picking up too much and drawing down already tight HRW and SRW stocks.

Corn is finally getting end-user attention that cheap corn is behind us, and hopes of a harvest break are slipping away. Farmers will store whatever is not pre-sold, and once the bin door is closed, it takes a bid to get it back out. Ethanol plants are currently bumping basis, on top of the big daily gains this week, to keep farmers interested in selling.

December corn’s next stop is 535-540, with 550 as a major psychological point. A crashing stocks-to-use ratio, driven by rising demand and falling yields, suggests $6.00 is in the works. Meanwhile, soybeans are getting ready to rechallenge their contract highs near 12.56, with breakout targets above 13.00 if that occurs. If Chicago wheat closes above 706 today, it would produce a continuation-chart breakout, with 730 being retargeted. Our long-standing target of December KC wheat trading above $8.00 now looks increasingly within reach.