Written Commentary
MORNING AG OUTLOOK
Mixed trade overnight with wheat higher while corn and the soybean complex are lower. Yesterday’s WASDE update was rather uneventful outside of the USDA statement essentially saying China might buy more soybeans and they might not. If they do, we’ll have less to sell to others. Sounds to me like their current export forecast of 1.575 bil. isn’t going higher. Conab is expected to update their Brazilian production estimates tomorrow. The Trump Admin. is working to keep an open dialogue with China ahead of Pres. Trump’s visit in April, however them buying another 8 mmt of old crop US soybeans would appear unlikely. Dry conditions across Argentina the past 24 hours however forecasts continue to tilt toward improved rains for the EC region into late Feb-26 providing needed relief. Outside of a few spotty showers in Minas Gerias much of Brazil also dry. Rains will gradually shift south providing relief for RGDS while a dryer outlook across WC region should promote crop maturation and harvest. The central US will see above normal temperatures the next 2 weeks. By this weekend heavy rains are expected to stretch from the Southern plains across the Delta and southern Midwest thru early next week. Little to no moisture for northern half of the Midwest along with the central and northern plains. Spot crude is up $1.35. The US $$ is slightly lower with US equity markets slightly higher ahead of the January jobs report. Economists expect 55k jobs were created, up from 50k in December.
Corn:
Mch-26 is down $.01 ¼ at $4.27 ½ at session lows. Spot prices remain rangebound between $4.15-$4.40. With Argentine FOB offers $.20-$.35 below US Gulf and expectations for higher production in Brazil I suspect the USDA’s 3.30 bil. bu. export forecast will be difficult to reach. EPA data is expected to show ethanol production rose to 317 mil. gallons LW, a sharp recovery from the 281 mil. the previous week.
Soybeans:
Mch-26 beans are down $.02 at $11.20 ½ in 2 sided trade. Mch-26 oil is now up 25 points at a new contract high of 57.51. Mch-26 meal is down $.50 at $300.30. Another session of active speculative buying in soybean and oil saw OI up nearly 14k in oil and just over 4k in soybeans. Brazilian FOB offers remain $.80-$1.10 below US Gulf thru May. The USDA raised Brazilian production 2 mmt yesterday to a new record high of 180 mmt, private estimates leaning closer to 185 mmt. Paraguay up .5 mmt to a record 11.5 mmt.
Wheat:
Prices are $.03-$.04 higher overnight. CGO Mch-26 is up $.03 ½ at $5.31 ¾ trading back above its 100 day MA. KC Mch-26 is up $.04 at $5.34 ½. EU soft wheat exports as of Feb. 8th at 13.43 mmt are up 2% YOY. While US stocks were up 5 mil. bu. on lower food usage, global stocks slipped a bit to 277.5 mmt on lowered stocks in Canada and Argentina on higher exports.
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