DTN Plains, Prairies Opening Comments

DTN Plains, Prairies Opening Comments

GENERAL COMMENTS:

The record dry August for portions of the eastern Corn Belt are finally showing up in the crop condition report, not that the market seems to be too concerned about it. Tuesday’s update, delayed a day due to the holiday, reported both corn and soybean crop conditions declining from last week with soybeans much more than expected. The good-to-excellent (G/E) rating for soybeans fell to 65% from 69% last week and below expectations of 68%, matching year ago levels now. Ohio in particular declined 8% on the week while Illinois lost 5% G/E. Corn was rated 69% G/E as expected but down from 71% last week. Of that, Ohio led the decline with a 7% reduction in G/E while Illinois lost 6%. With little more than scattered showers over the next day going out into mid-September, it’s hard to imagine yield not suffering, especially given reports of heavy disease pressure in the better crops in Iowa. Prices didn’t reflect that in overnight trade other than a small bump to start the session as the trade seems to be more concerned with the lack of demand from China than declining production prospects. In outside markets, crude oil has given back Tuesday’s gains on the assumption Russia will still get oil out despite recent drone attacks while product markets (diesel and gasoline) retain the bulk of their Tuesday gains.   

OUTSIDE MARKETS:

Treasury markets are quietly lower following a sharp break Tuesday, led by the 30-year bond as higher-than-expected inflation in the Eurozone stoked fears of increased inflation globally. The long bond has taken out the August low, looking like it is ready to test the July and maybe even the May low. The U.S. 10-year note is at 4.28%.

The U.S. dollar is quietly lower after testing its 100-day moving average yet again. It’s unlikely it will keep challenging it without eventually breaking higher. That fact, and the 97.00 level supporting values for almost three months now suggest a resumption of the downtrend seen during the first half of the year may now be unlikely. The Sept U.S. dollar is .062 lower at 98.285.

Equity markets are strong after recovering most of their early losses Tuesday. It looks like new contract highs may be the goal again.

Energy markets are somewhat mixed if you can call it that. Crude oil is sharply lower, giving back Tuesday’s gains as traders remain skeptical that damage to Russian oil infrastructure will reduce supply. On the other hand, diesel futures are barely lower on the day following a sharp rally off support levels and 100-day moving average, attracting buying interest on Tuesday. October crude oil is $1.36 per barrel lower at $64.23.

The Sept Canadian dollar is down .00060 at $.72520. The Brazilian real is down .00005 at .18150. December gold is up $18.60 per ounce, setting another record high and at $3610.80 now.

OILSEEDS:

Canola gave up Tuesday’s gains in overnight trade with weakness in soybean oil not helping. With little change fundamentally since last Monday when prices were trying to break over the 25-day moving average ($50/mt higher), only to retreat from it, the selling appears to be more technical in nature as funds continue to sell off their long positions. The problem with that is it’s always hard to predict just how far they will go. November canola is $5.10 lower at $625.20/mt.

Palm oil is quietly lower on profit taking. The October contract is down .77%.  

Soybean oil is lower, giving back much of Tuesday’s gains but holding above technically significant levels. Buying had emerged again at support at the top of the gap and the 100-day moving average with those levels at risk of facing another test. Fundamentally speaking, even with 12 million bushels (mb) more soybeans crushed in July 2025 versus 2024, soybean oil stocks to end the month were lower at 1.874 billion pounds compared to 2.009 billion pounds last year — indicating just how strong domestic demand has been. Technically speaking, with a portion of the breakaway gap higher that was left on the daily and weekly continuation charts in mid-June remaining, a leg up from the saucer bottom that’s been years in the making remains as the primary technical influence going forward.

European rapeseed is quietly lower, trading near the low end of its recent range. November rapeseed is 1.00 euros lower at 468.00 euros per mt.

Soybeans are quietly lower after giving up opening gains on weaker than expected crop conditions as discussed in the general comments. For more, see the USDA Weekly Crop Progress Report at https://www.dtnpf.com/agriculture/web/ag/news/article/2025/09/02/usda-crop-progress-corn-rated-69-65. A strong July soybean crush was also not enough to offset concerns over the apparent boycott of U.S. soybeans by China, with those concerns intensifying after a lack of sales last week followed by meetings between China, India and Russia that seemed to be very anti-American. The soybean crush total came out at 205 mb for July compared to 197 mb in June and 193 mb in July 2024. Pressure may also be coming from scattered showers expected to pass through the Corn Belt later Wednesday despite the drought damage and risk of frost. With the market much more sensitive to any production risks given the surprising cut in acres, there should be good underlying support on any pullback.

WHEAT:

Wheat markets are trying to bounce in early trade with another challenge of their 25-day moving averages possible yet again. Minneapolis wheat has been the weak one amid harvest of that variety with it setting new contract lows to start the month. Friday’s COT report confirmed that between Chicago and Kansas wheat markets, managed money traders had started covering their short positions ahead of the Aug. 26 cutoff, resulting in the attempted bottom formations. They were still net short 130,268 contracts or 651 mb. To put that in perspective — the ending stocks estimate for those two categories of wheat is only 548 mb. Short covering by this group is likely the best hope for any meaningful rally.

CORN:

Corn is quietly lower despite the decline in crop conditions following an impressive recovery on Tuesday to close higher on the day. With 17% of Illinois’ corn rated poor to very poor, 11% of Indiana and 10% of Ohio’s corn, it’s hard to imagine a record national yield anywhere close to those debated in early August. The many issues facing the crop has resulted in a $.30+ cent/bushel rally off the Aug. 12 lows as many, including fund traders, remain skeptical of record yield potential. With new-crop export sales over double last year’s pace thanks to low prices in anticipation of such a record large crop and slow farmer selling due to the same low prices, exporters may be pushing prices higher to encourage cash sales. It’s worth noting that the year is shaping up much like 2020 when record yields were predicted in August only to have the final yield well below trend. Technically speaking, the sharp rally off support at the 25-day moving average and early August resistance (now support) suggests an attempt by the market to fill the gap lower on July 7 would make sense. It would take a rally to $4.33/bushel in the December contract to accomplish that. Friday’s COT report confirmed managed money traders had reduced their net-short position by another 33,964 contracts or 170 mb during the week ending Aug. 26 — a clear indication of how serious they are taking the threats to record yield estimates. They remained net short 110,686 contracts or 553 mb with plenty of buying potential remaining.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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