Good afternoon. Happy Friday. Markets at the CBOT ended the week on a sharply lower note, as red ink was seen across pretty much the whole of the ag space. Traders continue to be uber-sensitive to day-to-day forecast runs, and a wetter/cooler run than what was offered yesterday caused end-of-week selling on Friday. Whether or not this shift is carried through the weekend will likely determine price direction in corn and soybean markets to start next week.

CU closed Friday at 3.94 1/2, down 11 1/2 cents. CZ was down 10 3/4 at 4.10. SQ closed at 10.77 1/2, down 38 1/2 cents. New contract low at 10.71 1/2. SX closed at 10.48 1/2, down 31 cents. WU was down 14 1/4 at 5.23 1/2. New contract low at 5.22. Products were mixed, August bean meal closed at 353.30, up 90 cents/ton, and August bean oil closed at 43.66, down 2.15. Meal closed above its 50-day moving average for the first time since June 24th. Livestock markets were mostly lower, August live cattle closed at 188.57, down 32 cents, August feeders were up $1.07 at 259.70, and August hogs closed at 93.47, down 30 cents. New high for the move in live cattle, and hogs had an inside day lower. Outside markets are mixed, crude oil futures are down $1.50-1.60/bbl, the Dow Jones index is up 600 points, and the US$ index is down 5-10 points. The S&P500 is up 50 points, and the NASDAQ is up 150 points. Inside day as of this writing for the both the S&P and the NASDAQ.

Spreads were again mostly lower to end the week; corn spreads were unchanged to a penny lower, and soybean spreads were down 6-13 cents. CU/CZ closed at -15 1/2, down 3/4 of a cent, and SQ/SX closed at 29, down 7 1/2 cents. SQ/SX was down 32 1/4 from last Friday's close.

For the week: September corn was up 4 cents; December corn was up 5 1/4; August beans were down 19 3/4; November beans were up 12 1/2; and September Chicago wheat was down 19 1/4.

The sensitivity to the weather is not unjustified, as just minor differences in final yield for both corn and soybeans lead to significant changes on the balance sheets. First looking at corn, if you raise yield to 183 bpa, compared to USDA currently at 181.0, and don't change any other figures, ending stocks swell to 2.259 bil bu's, and stocks/use comes in at 15.2%. And on the other side, lowering yield to 179.0 bpa translates to ending stocks of 1.926 bil bu's, and stocks/use of 12.9%. In soybeans, raising yield two bu's compared to the USDA to 54.0 bpa results in ending stocks of 606 mil bu, and stock/use of 13.9%. Going the other way, dropping yield to 50.0 bpa leads to ending stocks of 265 mil bu, and stocks/use of 6.1%. In both crops, these obviously present very different scenarios as far as price is concerned.

Data Friday was mostly limited to this afternoon's CFTC commitment of traders report, which showed for the week ending July 23rd fund traders covered potions of their short positions in all three of corn, soybeans, and Chicago wheat, while they were net sellers in both soybean oil and soybean meal. Managed money traders in the week were buyers of a combined 24,848 contracts of corn futures/options, buyers of a combined 22,091 contracts of soybean futures/options, and were buyers of a combined 702 contracts of Chicago wheat futures/options. This makes funds now net-short 318,549 contracts of corn, net-short 163,659 contracts of soybeans, and net-short 75,184 contracts of Chicago wheat. In soy products, fund traders sold 12,982 contracts of soybean oil, and sold 11,586 contracts of soybean meal. This makes them net-short 29,620 contracts of oil, and net-long just 15,341 contracts of meal.

Stock index futures ended the week on a positive note, as this morning's PCE price index update for June showed inflation is continuing to work lower. The reading came in at 2.5% which was as expected, and compared to last month's annualized 2.6% reading. Core PCE was just slightly higher than expectations at 2.6%, unchanged from May's reading. Going into next week, economists and investors will be anxiously awaiting the Fed's next FOMC meeting, which is scheduled for next Tuesday and Wednesday. There will likely be no rate adjustments out of this meeting, but as inflation continues to edge lower, traders will be looking for any sign that policymakers are ready to cut rates at their September meeting, which will be the next on the schedule.

Weather forecasts did not offer a ton of new developments today in the short-term. Rainfall through the weekend will still be mostly confined to the south and southeast, while the northern Plains into Canada also see rainfall chances. Heaviest totals of 2-3" look to be seen in E TX/N LA and along the lower Mississippi River into the Delta. Temps really begin to pick up on Sunday, with highs in central KS pegged in the lower 100's; this heat then expands into next week as the ridge slides west. Parts of CO, KS, NE, IA, MO, OK, and TX are all forecast to see triple digit heat by the middle of next week. Beyond here, the models have little to no agreement in the week two period, which was the one notable theme at mid-day on Friday. The European AI model, which has had a decent track record through summer, sees the ridge retrograding back west beyond the end of next week, which means the ridge is not expected to be long lived. This is part of the reason for the extraction of weather premium today.

The global forecast into the weekend continues to show good moisture for northern and eastern China, as Typhoon Gaemi makes landfall and moves through the country. European rainfall is a bit of a mixed bag; western Europe into Russia stays on the west side, while the bulk of Ukraine remains dry. The Black Sea and areas to the south have a slightly wetter bias. And there is also above average rainfall chances in parts of France and Germany. Australia continues to see average to above average precip, and South American precip continues to favor Argentina. The US is the global growing region with the most heat risk in the next 10 days, followed by China and western Europe. Eastern Europe into Russia sees temps near average.

Weather will continue to dominate ag headlines next week, as August weather is crucial to finishing off big corn and soybean crops. Have a good weekend!