Written Commentary
MORNING AG OUTLOOK
Nearly all green on the agricultural screen this AM as soybean oil is the outlier to the downside. Bean oil weakness stems from lower energy prices and fears SRE may be much higher than previously estimated. Speculators continue to hold down the buy button on corn as prospects for lower US production and stronger demand may tighten supplies. Energy prices are lower on hopes a peace deal between Iran and Omar may reopen the Straits of Hormuz. Spot WTI crude is down $1.80 per barrel at $80.50. Spot RBOB is down $.01 per gallon while HO is off $.12. Rains the past 24 hours favored the SW plains and far N. Midwest. Rainfall over the next 7 days to favor the Gulf Coast and SE, slowing early corn harvest, with only light scattered precipitation for much of the nation’s midsection. Above normal temperatures are expected to build across the much Midwest this weekend, holding into the first week of Sept. Rains in SA limited to NE Argentine and the interior south of Brazil where temperatures hold at normal levels. Warm and dry elsewhere. Rain in C. Europe to bring some drought relief while temperatures remain above normal. The US $$ is moderately higher ahead of a key US inflation report. The July PCE price index is expected to show prices rose .1% while up 3.6% YOY. US stock indices are mixed and little changed ahead of Nvidia earnings after today’s close.
Corn:
Sept-26 is $.06 higher at $5.06 ½ while Dec-26 is up $.05 at $5.28 ½. New contract high for Dec-26 while Sept-26 is closing in on its CH at $5.11 ¼. The spot contract traded to its highest level in nearly 3 years on the spot weekly chart. Today’s EIA data is expected to show ethanol production increased to 321 mil. gallons last week, up from 320 mil. gallons the previous week. AgroConsults forecasts Brazilian fertilizer imports and local production will fall 7.5% to 45.3 mmt. They also forecast corn acres rising 3% for the 26/27 growing season to 23.3 mil. HA. The BAGE forecasts Argentine 26/27 corn acres holding at 8.4 mil. HA, unchanged from the previous year. We see the MM long position stretching out to 338k contracts after 5 consecutive sessions of strong speculative buying.
Soybeans:
Sept-26 and Nov-26 beans are up $.04 ½ at $12.32 ½ and 12.42 ¼ respectively, both trading into new highs for the week. Sept-26 meal is up $4 at $324.30, trading to its highest level in a month. Sept-26 oil is down 95 points at 66.57 while holding within yesterday’s range. Crush margins have fallen another $.06 ½ to $2.13 bu., the lowest in 6 months. The EPA is expected to issue rulings on 34 SRE exemption requests dating back to July-24. Reports suggest SRE relief could total as much as 1.8 bil. well above previous expectations of 1.2-1.3 bil. China’s Sinograin sold off nearly 223k mt of soybeans, 77% of the volume offered, from state reserves to free up storage space ahead of US imports. AgroConsults forecasts Brazilian soybean acres in 26/27 will hold at 49.2 mil. HA (121.6 mil. acres) little changed from the previous growing cycle. US Gulf FOB offers continue to hold $.30-$.35 below Brazilian offers. Uncertain US production combined with Chinese buying provide little wiggle room for US yields to slip from the current USDA production est. of 4.519 bil. bu.
Wheat:
Prices range from $.09-$.15 higher. CGO Dec-26 is up $.14 at $7.17, KC Dec-26 is $.14 ½ higher at $7.85 ¼ while Dec-26 MIAX is $.09 higher at $7.29. CGO and KC have both traded to new highs for the month. Repairs to damaged grain infrastructure at Russia’s port of Novorossiysk could take between 1 to 4 months before operations can resume while they considering pausing their grain export duty. Consulting group ProZerno expects total Russian grain exports will reach just over 2 mmt, down 20% from their forecast 2 weeks ago. EU soft wheat exports as of Aug. 23rd at 2.38 mmt are down 33% YOY. Tunisia is seeking 125k mt of milling wheat in a tender that closes tomorrow. The grain is for shipment between Sept and Nov.
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