Higher Ags Once Again Driven By Energy Surge

MORNING AG OUTLOOK

Agricultural prices are mostly higher this AM, once again driven by a surge in energy prices.  In his address to American public last night Pres. Trump appeared to stick to the 2-3 week timeframe for US military forces to achieve their objectives in Iran, however emphasized that over the next few weeks the US would “hit Tehran extremely hard” while looking to “bring them back to the stone ages where they belong”.  Certainty not a tone of deescalation the market was hoping to hear.  Headline to headline trading continues.  Spot WTI crude oil is up $9.50 per barrel near $109.60 inching closer to the March high just above $113.  Spot RBOB is up $.21 per gallon while HO hit a fresh contract high, current up $.51.  Rains continue to track across the nation’s midsection including the Southern and SE plains and Delta region where plantings will come to a halt.  Lighter amounts for the far WCB and SW plain.  In Argentina rains over the next week will be concentrated in the EC region which will work to slow crop development and lead to potential quality issues.  Much of Brazil  will see a mix of rain and sunshine over the next week with heaviest totals in the far south in RGDS.  The US $$ is sharply higher while US equity markets are pointing to a sharply lower open.

Corn: 

May-26 is up $.04 ¼ at $4.58 ½ while Dec-26 is $.04 higher at $4.85 ¼ both near session highs while holding within yesterday’s range.  Export sales later this AM expected to range from 40-60 mil. bu.  Corn grind for ethanol production in Feb-26 at 425 mil. bu. was slightly above expectations of 422 mil.  In the MY to date corn usage has reached 2.744 bil bu, down less than .5% from YA vs. the USDA forecast of up 3%.  I’m guessing waivers to allow E-15 to be sold nationwide over the summer months will not be enough to prevent a modest cut to corn usage.  The BAGE kept their Argentine production forecast at 57 mmt, well above the USDA forecast of 52 mmt.  They report harvest progress at 19%.

Soybeans: 

May-26 beans are up $.04 at $11.72 ½ while Nov-26 beans are $.04 higher at $11.59 ½, both holding within yesterday’s range.  May-26 meal is down $2 at $316.20 while oil is up 124 points at 68.35.  Export sales are expected to range from 15-25 mil. bu. of beans, 200-400k tons of meal and 0-10k tons of oil.  After yesterday’s close census crush in Feb-26 at 214 mil. bu. was at the low end of expectations, however a record high for the month.  In the first half of the 25/26 MY cumulative crush at 1.334 bil. Bu. is up 8.2% from YA, vs. the USDA forecast of up 5.3%.  I look for the USDA to raise their current crush est. of 2.575 bil bu. 15-20 mil in the April WASDE report.  Bean oil stocks as expected surged nearly 7% to 2.6 bil. from Jan-26 and are up 35% YOY.  The BAGE kept their Argentine production forecast at 48.5 mmt, just above the USDA est. of 48 mmt.  While energy/war headlines will continue to drive price volatility, over the next 2-3 weeks look for the markets focus to shift more on to US weather along with Pres. Trump’s upcoming trip to China.

Wheat: 

Prices range from $.06-$.11 higher.  CGO May-26 is up $.10 ½ at $6.08 while KC May-26 is up $.09 ¼ at $6.23.  Despite rains this week, look for today’s updated drought monitor (thru Tues.) to show an expansion of drought readings across HRW wheat areas.  Export sales are expected to range from 10-25 mil. bu.

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