Written Commentary
MORNING AG OUTLOOK
Prices in the Ag space have turned higher across the board with several contracts experiencing choppy 2-sided trade. The higher trade being driven by increased tensions in both the US/Iran and Russia/Ukraine wars along with a threatening US weather forecast. Both the Straits of Hormuz and Kerch Straits remain largely closed to vessel traffic. US military forces have carried out strikes against Iranian targets for 9 consecutive days while Iran continues to to attack US forces in the region. Two US servicemen were killed in Jordan while Iran also damaged a crude oil facility and power plant in Kuwait. Energy prices have turned mixed after a higher open. Spot WTI crude oil is down $.40 a barrel near $82.10 after trading above $85 for the first time in 6 weeks. Spot RBOB is steady while HO is up $.04 a gallon. Ukraine continues to attack Russian vessels in the Azov Sea while Russian launching strikes against Kiev and port infrastructure along the Black Sea. Ukraine officials stated 10 people were killed when a Russian missile struck a vessel carrying corn near the port of Odesa. US weekend temperatures exceeded 100 F degrees across N. NE and SD with mid to upper 90’s for much of the N. plains and WCB. While scattered rains impacted the central and ECB, much of the WCB and N. plains were dry. While temperatures across the WCB will ease for a 3-4 days, much above normal temperatures are expected to return by next weekend. While a system may bring scattered rains into the WCB mid-week, the overall weather picture remain yield threatening. Mostly favorable for the central and ECB. W. Europe returns to a hot/dry pattern. Weekend rains in Argentina not expected to delay corn harvest for long. Dry in WC Brazil favorable for corn harvest with potential for moderate to heavy rain in the South. The US $$ is little changed in 2-sided trade while US equity markets are higher.
Corn:
Sept-26 is up $.06 at $4.50 ¾ while Dec-26 is $.07 higher at $4.74 ½ having traded to its highest level in 7 weeks. Friday’s CFTC COT report showed MM’s were net buyers of 31k contracts in their most recent reporting period. IMEA reports 2nd crop corn harvest in Mato Grosso (Brazil’s largest producing state) has reached 79%, just above the YA pace of 77% however below the long-term average of 85%. Safras & Mercado forecast Brazil’s 26/27 production will reach 145 mmt, up from 140.4 mmt in 25/26. The USDA forecast for 26/27 is 139 mmt.
Soybeans:
Aug-26 beans are up $.15 ½ at $12.20 while Nov-26 is $.16 higher at $12.19. Aug-26 traded to a 2-month high while Nov-26 hit a 3-year high with next resistance at its contract high of $12.41. Aug-26 meal is up $2.20 at $322.40 while Aug-26 oil has fallen back to unchanged. Crush margins have fallen back $.12 to $3.10 ½ bu. MM’s were net buyers across the Ag. space extending their estimated combined long position back up to 253k contracts at Friday’s close. China’s record imports from June-26 at 13.55 mmt were largely from Brazil. Imports from Brazil at 12.1 mmt were up 14% from June-25 while imports from US at 1.27 mmt vs. 1.6 in June YA. YTD imports from the US at 9.3 mmt are off 42.4% from last year, while Brazilian imports at 34.75 mmt are up 9%. I look for US ratings to slip 1-2% from 65% G/E last week. Safras & Mercado forecast Brazilian plantings in 26/27 will rise ½% to 49.1 mil. HA with production reaching 180 mmt, vs. 178.3 mmt in 25/26.
Wheat:
Prices are $.02-$.06 higher in choppy 2-sided trade overnight. CGO Sept-26 is up $.02 at $6.84 ¾, KC Sept-26 is $.02 ¾ higher at $7.35, while MIAX Sept is up $.05 ¼ at $6.97. Supply disruptions from the world’s largest exporter of wheat coupled with lower production in the US and EU will likely keep the path of least resistance higher with volatility elevated. Argus has lowered their French soft wheat production forecast 7.6% from YA to 30.8 mmt. MM’s were net buyers across all 3 classes reducing their combined short position to 25k contracts, the smallest in 2 months.
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