Written Commentary
MORNING AG OUTLOOK
Corn:
Stronger than expected action yesterday as corn had an outside reversal higher on the daily chart, in the face of sharp weakness in the energy markets. Fund buying was estimated at upwards of 17,000 contracts. Crop stress in the southern half of the Plains will continue and NWS is warning of a flash drought in that region. Conditions dropped 2% this week to 61% G/E, slightly more than expected and compared to 73% a year ago. It was the 3rd straight week of condition declines. Rain will develop the 2nd half of this week across the southern half of Iowa and northern half of Illinois, but the western belt will see very light amounts at best. The hottest temperatures will shift from the Southwest Plains east to the lower Midwest, Delta and southeast US over the next 2 weeks. The EU will see some scattered rains this week, but above normal temperatures will continue and the heat will be moving into Ukraine this week. Corn use for ethanol in June was down 1.5% from May but up 4.4% year-over-year.
Soybeans:
Following a high range close yesterday in beans, the market is pulling back this morning despite the extended forecast showing heat returns across the Midwest. The bears have the tentative edge, although upside follow-through today after yesterday’s strong close could shift sentiment back to the bulls for the near-term. Conditions were unchanged this week at 63% G/E, compared to 69% a year ago and 56% of the crop is setting pods, right on average. An eastward shift in the heat in the extended forecast will place the hottest temperatures in the 6 – 14 day outlook across the lower Midwest and southeast, although above normal precipitation is still expected across the eastern belt with dry conditions remaining in place in the southern Plains and Delta. Additional flash sales this morning to China may be announced after their 1 million tonne purchase last Friday.
Wheat:
The wheat market opened near the lows of the day yesterday and closed near its highs but is pulling back this morning after HRS conditions rose 2%, more than expected, and the US Ag attaché raised Canadian production. After last week’s 17% increase in HRS area under drought, most expected conditions to drop at least 1% but instead NASS showed a 2% gain. Winter wheat harvest moved to 86% complete, right on the five-year average. The market rallied midmorning yesterday after Pres. Trump indicated the negotiations with Iran were not moving forward quick enough and Russia hit another 8 Ukrainian ships overnight, while Ukraine hit 3 Russian port warehouses. The market acts tired of reacting to these Black Sea attacks and Russian prices are down $9 week over week due to high freight and insurance costs. The Rhine River hit a record low yesterday and EU shipping costs are rising as well with barge load size restricted. Algeria announced a 50,000 tonne tender yesterday and they typically buy much more than their initial tender size.
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