Higher Prices Across The Agricultural Markets

MORNING AG OUTLOOK

A lot of green on the screen this AM with higher prices across the agricultural markets, energy prices and US stock indices.  While probably not a shock, markets clearly liked President Trump extending the ceasefire agreement with Iran.  The length of the extension is not clear however warranted due to Tehran’s “seriously fractured” government.  The US military blockade of Iranian ports will continue until “their leaders and representatives can come up with a unified proposal”.   June-26 WTI crude oil is up $.50 a barrel near $90.15.  Spot RBOB is up $.01 per gallon while HO is up $.11.  Above normal temperatures across the nation’s midsection for a few more days before weekend cooling across the NC Midwest.  Rain is expected to favor the central and southern Midwest, including much of NE and E. Kansas.  Dry for the far SW plains with light to moderate shower activity in the N. plains.  Cooler than normal temperatures across the central Midwest extends into week 2 of the outlook.  Argentina looks mostly dry into month-end supporting harvest activities.  Rains in Brazil will favor the interior south where they are most needed.  Much of the central and northern growing areas turn hot/dry.  The US $$ index is steady in 2-sided trade.  US stock indices are moderately higher.

Corn: 

July-26 and Dec-26 are both $.02 higher at $4.64 and $4.83 ¾ respectively.  Both traded to fresh 3-week highs.  EIA data is expected to show ethanol production slipped to 319 mil. gallons last week, down from 329 mil. the previous week.  A group of congressional lawmakers, the E15 Rural Domestic Energy Council, is expected to submit legislation today that would allow the year-round sale of higher ethanol gasoline while also restricting exemptions for smaller refineries.  If ultimately passed domestic corn demand could grow by 2-2.5 bil. bu. over the next several years.

Soybeans: 

July-26 beans are up $.06 at $11.96 ½ while Nov-26 is $.03 ½ higher at $11.70.  July-26 briefly traded above $12 for the first time in 5 weeks.  So far Nov-26 stalled just below its March high at $11.74 ¼.  New contract high in soybean oil with the spot contract trading to a 3 ½ year high.  Crush margins were steady overnight after surging $.19 yesterday to $3.34 ½, nearing its modern day high at $3.40.  Bean oil PV has jumped to a new all-time high at 52.6%.  Improved demand for biofuels, particularly in countries impacted by the reduced crude oil supplies from the Persian Gulf, along with a surging D4 RIN values has increased biodiesel and RD profit margins.  Speculative traders bought nearly 13k contracts of bean oil yesterday, however O.I. increased only 1,100 contracts.  Look for the CFTC to print another record large MM long position in Friday’s updated COT report.  The markets attention will gradually shift to Pres. Trump’s meeting in Beijing with Chinese leader Xi next month.  Wire services are reporting at least 10 vessels are being held up at Argentine ports as a trucker protest over increased costs is preventing supplies from reaching key export hubs.

Wheat: 

Prices have turned mixed.  CGO July-26 is steady at $6.13, KC July-26 is $.03 lower at $6.52 ½ while MIAX July-26 is steady at $6.83 ¼.  EU soft wheat exports as of April 19^th at 19 mmt are up 8% YOY.  Rusagrotrans reports Russian exports on April will likely reach 3.8 mmt, well above the 2.39 mmt shipped in April-25.

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