The overnight grain trade had seen a mixed approach after yesterdays heavy selling erased most of the Monday night’s gains, when wheat was up as much as $0.30. Last nights weakness absorbed the anticipated StoneX high watermark estimate for Friday’s WASDE/Crop Production report, with corn at 182.9 BPA and beans at 53 BPA. The important point is StoneX lowered corn by 2 BPA from their desk, which follows the direction the trading world is anticipating.

More positioning will be seen ahead of Friday’s report. Corn estimates range from 177-182 BPA compared to USDA at 180.7, while beans range from 51-53 BPA versus USDA at 52.7. Production will be important, but demand may carry even more weight, especially with US new crop soybean sales running twice last year’s volume.

This mornings story helping grains absorb yesterday’s bearish attitude is a reported Russian strike on a cargo vessel sailing toward Odesa, with Russia claiming it carried military equipment. If confirmed, this takes the conflict another step beyond attacks on ports and infrastructure to directly involving commercial vessels at sea. Russia also launched another large drone attack across Ukraine, including the Odesa region.

Meanwhile, the U.S., Turkey, Russia and Ukraine continue discussing possible protections for grain shipments, commercial vessels and energy infrastructure. A Putin aide this morning said Russia was considering Abu Dhabi as a priority location for Ukraine talks, which softened grains off their 6 a.m. highs.

Saudi Arabia’s cancellation of its wheat tender Monday put the wheat world in a tizzy over buyers refusing the new elevated prices. But Pakistan is expected to tender soon for 500,000 MTs of wheat, which may help establish the price Saudi Arabia eventually has to accept. They are not used to losing control of buying what they need.

Crude pushed above $95 overnight, with Brent hitting $100, while diesel is approaching $6.00 a gallon in some areas. Diesel is the true inflation source because it’s in everything from production and manufacturing to transportation. US diesel exports are up 31% from last year, while the Gulf Coast produces roughly 59% of our needs. Imagine the added problem if a hurricane hits the Gulf Coast with peak season just in front of us.

Harvest has slowed the ascent of grains as corn and beans are sold right off the combines. Why wouldn’t they beyond pre-sold crop? Corn is well over $5.00 at harvest and beans are in the teens. Despite this, trend momentum remains higher, with relatively small corrections in row crops. Wheat has barely seen a 10% retracement and is again pressing higher post-harvest during its seasonal window into October, with a large portion of the world’s normally cheaper sourced wheat removed from the market.

There are two more sessions of trade before the WASDE/Crop Production report is released 11:00 a.m. CT on Friday. Headline whips will continue, but the dominant trend remains higher.