Higher Trade Across The Soybean Complex

MORNING AG OUTLOOK

Higher trade across the soybean complex and corn this AM while wheat prices are mixed in 2-sided trade.  Markets continue to inject both war and weather premium.  Better than expected results from day 2 of the wheat tour in ND provided a reason for traders to book profits following the recent surge to contract highs in both CGO and KC futures.  Energy prices are higher after the Houthi militant group attacked 2 Saudi Arabian tankers in the Red Sea as concerns mount that war will continue to expand.  Pres. Trump responded by threatening to bomb Iran’s infrastructure.  Spot WTI Sept-26 crude oil is up $3.80 per barrel near $90.60 trading to a 2-month high.  Sept-26 RBOB is up $.04 per gallon while HO is $.10 higher, both stretching out to new contract highs.  Scattered rain in the WCB the past 24 hours before temperatures surge back to much above normal readings this weekend.  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.  Below normal precipitation across much of the nation’s midsection is expected to stretch into early August.  Western Europe remains hot and dry while cooler in the east with scattered precipitation.  Dry in WC Brazil will continue to support corn harvest.  Scattered showers expected in S. Argentina while moderate to heavy rains in S. Brazil.  The US $$ is slightly higher while US stock indices are lower.

Corn: 

Sept-26 corn is $.04 higher at $4.66 while Dec-26 is up $.04 ½ at 4.89 ¼.  Both traded to fresh 8 week highs.  Yesterday’s EIA data showed ethanol production rose to 322 mil. gallons last week, up from 306 mil. the previous week and up 1.5% from YA.  Production was at the high end of the range of expectations, however below the pace needed to reach the USDA corn usage est. for a 14^th consecutive week.  Stocks rose to 24.5 mil. barrels, just above YA at 24.4 mb.  Tomorrow’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.  Today’s export sales are expected to land between 25-65 mil. bu. for both crop years combined.  Huge speculative buying yesterday took the MM long position back up to roughly 100k contracts.  O.I. rose nearly 7k.

Soybeans: 

Aug-26 and Nov-26 beans are both up $.07 ½ at $12.40 ½ and $12.46 ½ respectively.  New contract high for Nov-26, while Aug-26 reached its highest level in 2 ½ years.  Next significant resistance for old crop is $12.58 ¼, the May-24 high on the weekly continuation chart.  Aug-26 meal is up $2.30 at $333.90 while Aug-26 oil is up 58 points at 76.06.  Inside trade for meal while oil jumped out to a 7-week high.  Crush margins are up another $.05 to $3.31 ½ bu.  US Gulf FOB offers holding $.10 above Brazilian offers for spot shipment while about the same Sept-26 forward.  Continued demand interest from China (and others) coupled with an uncertain weather outlook in the WCB will likely keep the path of least resistance to the upside.  The market has little wiggle room for US yields slipping below the current 53 bpa trendline forecast.  The combined speculative long position in the soybean complex is approaching 300k, still well below the May-26 record at just over 501k.  Yesterday’s O.I. was up 11.8k in beans, 5.9k in meal, and 3.7k in oil. Export sales are expected to range from 40-80 mil. bu. of soybeans, 200-500k mt of meal and -2-10k tons of bean oil.

Wheat: 

Prices range from down $.01 to $.04 higher.  CGO Sept-26 is up $.03 ¾ at $7.09 ½ while trading to a new contract high.  KC Sept-26 is $.01 ½ higher at $7.65 holding within yesterday’s range.  MIAX Sept is $.01 lower at $7.28.  Hopes for a quick solution to the supply disruptions from the Black Sea region appear to be fading.  Ongoing war between Russia/Ukraine combined with lower production in the US/EU will likely keep the path of least resistance higher with volatility elevated.  Day 2 of the ND Wheat Quality Council’s crop tour estimated yields in the NW portion of the state at 48 bpa, up from the 47.1 yield YA.  The tour ends today with a final yield and production forecast expected after the close.   The USDA is forecasting an average yield of 58 bpa, just below the 2024 record yield of 59 bpa.  Export sales are expected to fall between 8-20 mil. bu.

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