Mixed Trade After Choppy Overnight Trade

MORNING AG OUTLOOK

Mixed trade across the Ag space this AM after choppy 2-sided trade overnight.  There are expanded limits of $.70 in both CGO and KC wheat today following yesterday’s limit move in nearby CGO futures.  Huge speculative buying across the Ag space yesterday after Russia reportedly rejected Ukraine’s offer to pause attacks on each others infrastructure while instead suggesting they would intensify their attacks.  Spot corn, KC and CGO wheat all carved out 3-year highs, while spot soybeans reached a 2 ½ year high.  Products continue to lag with crush margins in full retreat.  Energy prices are mixed and little changed with spot crude up $.25 barrel at $82.50, while spot RBOB is down $.02 a gallon with HO off $.04.  US weather saw healthy rains across the Gulf coast and Delta region, with scattered showers in the S. Midwest and ECB.  Dry across much of the nation’s midsection over the next week with rains limited to the Gulf coast while scattered activity in the N. Midwest and Great Lakes region.  Above normal temperatures are expected to build from west to east across the midwest this weekend, holding thru the first full week of Sept.  In SA rain will be limited to NE Argentine and Southern 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 slightly higher after stretching out to a new high for the week.  US stock indices range from steady to up 1% led by the Nasdaq and an earnings beat from Nvidia.

Corn: 

Sept-26 is $.02 lower at $5.12 while Dec-26 is $.02 ½ lower at $5.34, both holding within yesterday’s range.  We’ve got the speculative long position nearing 400k contracts for the first time since April-21, vs. the record long position of 429k way back in Oct-2010.  O.I. on yesterday’s price surge however was down 5.6k contracts.  Argus is forecasting French corn production at only 6.9 mmt, down 48% YOY and the lowest production in 50 years.  Expectations for lower US production and the potential for higher demand resulting in significantly lower US and global stocks has fueled the price surge which has now reached $1.10 off the late June low.  Export sales are expected to land between 30-65 mil. bu.

Soybeans: 

Sept-26 and Nov-26 beans are down $.04 ¼ at $12.50 and $12.61 ¾ respectively, both holding within yesterday’s range.  Oct-26 meal is up $2.60 at $335.70, trading to a fresh 9-month high.  Oct-26 oil is down 129 points at 66.14 after falling to a 2-month low.  Crush margins have fallen another $.03 ½ to $2.05 bu., the lowest in 6 months, while bean oil PV has slipped below 50%.  The EPA is expected to issue rulings on 34 SRE exemption requests.  Reports suggest SRE relief could total as much as 1.8 bil. well above previous expectations of 1.2-1.3 bil.  The Trump Admin. has excluded China from Iranian sanctions to allow them additional time to shift energy demand to other suppliers. US Gulf FOB offers continue to hold $.30-$.35 below Brazilian offers as China’s US soybean purchases stack up ahead of Xi visit to Washington DC in just under a month.  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.  Export sales are expected to range from 40-110 mil. bu. of soybeans, 200-500k tons of meal and 0-12k tons of bean oil.  We’ve got the MM long in soybeans at nearly 200k contracts, vs. the record of long 254k from back in May-2012.  O.I. from yesterday’s trade saw beans +12k contracts, unchanged in meal while -7.3k in oil.

Wheat: 

Prices currently range from $.03-$.05 higher in choppy 2-sided trade.  CGO Dec-26 is up $.03 at $7.33 ½, KC Dec-26 is $.01 higher at $8.10 while Dec-26 MIAX is $.03 higher at $7.51.  Repairs to grain infrastructure at Russia’s port of Novorossiysk could take between 1 to 4 months.  Up to 70 vessels are waiting near the Danube’s Sulina Canal for access to Ukrainian ports to load grain for export.  Bottlenecks will likely continue to build with only 5-7 vessels moving through per day.  Meanwhile drought conditions in Ukraine threaten to delay and/or reduce winter wheat plantings for the 2027 harvest.  Logistical issues are starting to turn into supply issues.  Egypt, the world’s largest wheat importer who typically imports 80% of their wheat from Russia/Ukraine has reportedly bought 2 cargoes of wheat from France.  Sudan has also reportedly bought a cargo of wheat from France, their first in 18 years.  Argus reports France’s soft wheat production will reach 30.8 mmt, down 7.6% YOY while all EU production at 161.5 mmt is down 9%.  US exports are expected to range from 8-20 mil. bu.  Results pending from Tunisia’s 125k mt wheat tender and 120k from Jordan.

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