Written Commentary
MORNING AG OUTLOOK
Higher trade across most of the Ag space overnight driven another surge higher in energy prices and a threatening US weather forecast. The Straits of Hormuz and Kerch Straits remain largely closed to commercial traffic. US military forces carried out strikes against Iranian targets for an 11th consecutive days while Iran continues to attack US forces in the Gulf region. Spot WTI Sept-26 crude oil is up $2.75 per barrel near $87.10 trading to a 6-week high. Spot RBOB is up $.04 per gallon while HO is $.08 higher, both stretching out to new contract highs. Scattered rain in the ECB the past 24 hours with another system currently bringing showers to central NE. The N. Midwest and ECB will experience normal to below normal temperatures the next few days before temperatures rebound this weekend. Much above normal temperatures and limited prospects for rain in the WCB will raise crop stress levels. Week 2 of the outlook holding in a hot/dry pattern. Western Europe also remains hot and dry while cooler in the east with scattered precipitation. Dry for much of Argentina and WC Brazil favorable for corn harvest. Moderate to heavy rains expected in S. Brazil. The US $$ is little changed while US equity markets are lower.
Corn:
Sept-26 and Dec-26 are both $.06 higher at $4.58 ¾ and $4.81 ¼ respectively. Both trading to their highest levels in 8 weeks. EIA data is expected to show that last week’s ethanol production rose to 316 mil. gallons, up from 306 mil. the previous week. Stocks are forecast to hold steady at 24.3 mil. barrels. Friday’s cattle on feed report is expected to show inventories at 102.2% of YA at 11.372 mil. head. Threatening US weather combined with hopes of Chinese demand keep the path of least resistance higher.
Soybeans:
Aug-26 beans are up $.08 at $12.27 ½ while Nov-26 is $.06 ½ higher at $12.29 ¼ Both are holding within this week’s range. Next significant resistance for old crop is $12.58 ¼, the May-24 high on the weekly continuation chart. Aug-26 meal is up $3.10 at $329.80 while Aug-26 oil is steady. Crush margins are little changed at $3.15 ½ bu. US Gulf FOB offers remain $.15-$.20 above Brazilian offers thru Sept-26 while slipping to a $.05 discount by Nov-26. Continued demand interest from China (and others) coupled with an uncertain weather outlook in the WCB will likely keep to path of least resistance to the upside. The market has little wiggle room for US yields to slip below the current 53 bpa trendline forecast.
Wheat:
Prices range from $.10-$.18 higher. CGO Sept-26 is up $.17 ½ at $6.95 ½ closing in on its spring high of $7.00. KC Sept-26 is $.16 ½ higher at $7.49 ½ closing in on its May high at $7.58. MIAX Sept is $.10 higher at $7.14 ¼. Supply disruptions from the Black Sea region coupled with expectations for lower production in the US/EU will likely keep the path of least resistance higher with volatility elevated. Ukraine claims to have hit another 13 of Russia’s shadow fleet in the Azov and Black Sea over the past few days. Day 1 of the ND crop tour estimates HRS yields at 46 bpa, below the 50 bpa from YA. The tour ends on Thursday when they will issue their production forecast for the state.
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