Higher Ag Trade Flipped to All Red

MORNING AG OUTLOOK

Higher trade across the Ag Space overnight flipped to all red around 6:05 AM CST as Pres Trump ordered a halt to strikes on Iran’s energy infrastructure for 5 days amid “productive” talks.  Prices have since leveled off near unchanged.  Headline to headline trading…..  Early strength was driven by record heat in the SW plains along with heightened tensions in the Middle East.  Spot WTI crude is currently down $6.00 per barrel near $92.25 after trading to nearly $102 per barrel.  Spot RBOB is down $.15 per gallon with HO down $.11 after both set fresh contract highs on early strength.  Over the weekend Pres. Trump vowed to “obliterate” Iran’s power plants if they didn’t fully reopen the Strait of Hormuz within 48 hours.  Iran responded by saying such attacks would result in retaliatory strikes on energy and oil infrastructure across the Middle East.  Weekend temperatures soared into the middle to upper 90’s across much of the central and southern plains.  Even a few 100+ degree readings for the TX panhandle.  Drought conditions to deepen with no precipitation thru the end of March.  After a few days of cooling, temperatures to surge back to above normal readings by mid-week.  Heavy rains of 4”-6.5” across EC Argentina resulted in some localized flooding.  In Brazil rains favored the EC region of Goias and Minas Gerais with some scattered amounts in N. MGDS.  The mid-south to remain in a dryer than normal pattern.  Friday’s CFTC report showed both MM’s and index funds were net buyers across the Ag space.  The US $$ is moderately lower while stock indices are sharply higher.

Corn: 

May-26 is steady at $4.65 ½ while Dec-26 is $.01 higher at $4.92.  Stocks divided by Q1/Q2 usage at 95% however is below the 96% from YA and the lowest in 4 years.  Cattle in US feedlots on March 1^st at 11.55 mil. head were down .2% from YA, vs. expectations of down .7%.  Placements at 1.61 mil. head were up 3.7% YOY vs. expectations of up only .3%.

Soybeans: 

Prices have stabilized near unchanged.  May-26 beans are up $.02 at $11.63 ¼ while Nov-26 is $.03 higher at $11.44.  May-26 meal is unchanged at $328 while bean oil is down 35 points at 65.16.   Spot board crush margins backed off a few cents on Friday to $2.81 after soaring to a 3 ½ year high earlier in the week.  Bean oil PV recovered back to 50%.  I suspect even higher energy prices and/or renewed buying from China, is needed for spot soybeans to trade back above $12.  If neither happens, look for prices to retest $11 this Spring.  Look for details of Pres. Trump’s delayed trip to Beijing to emerge this week.  Hopeful we’ll get RVO and SRE’s clarity at the Agricultural event at the White House on Friday.   My Mch 1^st stocks forecast is 2.116 bil bu vs. 1.911 bil YA.  Stocks divided by Q1/Q2 usage at 85.3% is well above the 68% from YA.  Both stocks and stocks/use are a 6 year high.  July-26 near $11.75 is historically high, however IMO  justified (for now) given potential Chinese buying and energy price volatility.

Wheat: 

Prices range from $.03 lower in CGO to $.01 higher in MIAX.  CGO May-26 is down $.03 at $5.92 while KC May-26 is down $.01 at $6.05 ½.  Both the 6-10 and 8-14 day outlooks show above normal precipitation across the US plains, which would be of great benefit to the winter crop emerging from dormancy.  Russia’s Ag. Ministry jacked up their export tax from 140.9 roubles/mt to 515.6 roubles for the period ending Mch. 31^st.

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