Written Commentary
MORNING AG OUTLOOK
All green on the screen this AM with soybeans the leader to the upside having traded to fresh 2 ½ month highs. The soy complex apparently drawing support from a report in the South China Morning Post that US/China will look to extend their trade truce from last fall for up to a year when Pres. Trump and Chinese leader Xi meet in Beijing in April. The SCMP reports this meeting has yet to be finalized. Export sales later this AM. Brazil’s Conab lowered their corn and wheat production forecasts while increasing their soybean estimate. Scattered rains fell across EC areas of Argentina the past 24 hours. Heaviest concentration across central Santa Fe and Entre Rios. Forecasts continue to tilt toward improved rains into late Feb-26 providing needed relief. WC areas of Brazil are expected to see a break from recent heavy rains as they shift south. The dryer outlook across WC region should promote crop maturation and harvest. The central US will see above normal temperatures thru the end of Feb-26. Healthy 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 down $.20 a barrel. The US $$ is slightly higher while US stock indices are higher.
Corn:
Mch-26 is up $.01 at $4.28 ½ while holding within yesterday range. Spot prices remain rangebound between $4.15-$4.40. Yesterday’s EPA data showed ethanol production rebounding to 326 mil. gallons, up 2.6% YOY and above the pace needed to reach the USDA usage forecast of 5.60 bil. bu. Export sales are expected to range between 25-60 mil. bu. Conab lowered their Brazilian production forecast .5 mmt to 138.45 mmt, still well above the USDA forecast of 131 mmt. The 2nd crop was trimmed 1.2 to 109.26 mmt due to reduced acres. The Rosario Board of Trade kept their Argentine production forecast unchanged at 62 mmt.
Soybeans:
Mch-26 beans are up $.11 at $11.35, off their high of $11.41. Mch-26 oil is up 31 points at 57.36 while holding within yesterday’s range. Mch-26 meal is up $4.80 at $307.90 holding just below this month’s high. Export sales are expected to range between 12-48 mil. bu. of beans, 200-450k tons of meal and -10-16k tons of oil. Conab raised their production forecast nearly 2 mmt to 178 mmt, still below the USDA est. of 180 with many private forecast in the mid 180’s. Higher yields more than offset slightly lower acres. The RBOT raised their Argentine production forecast 1 mmt to 48 mmt while citing anticipated rains over the next 2 weeks will be critical for crop development. Brazilian FOB offers remain $.80-$1.00 below US Gulf thru May.
Wheat:
Prices range from $.02-$.04 higher overnight. CGO Mch-26 traded to a new high for the month with next resistance at $5.44 ¾. KC Mch-26 is up $.03 ¼ at $5.41 ¾ with next resistance at $5.50. Conab lowered their production forecast 1 mmt to 6.9 mmt, well below the USDA est. of 8 mmt. Export sales are expected to range between 8-18 mil. bu. Speculative trader bought 3k contracts of CGO futures yesterday reducing their short position to roughly 79k contracts, however O.I. plunged 24k contracts, suggesting the price jump was a result of speculative short covering. O.I. in KC was steady.
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