Written Commentary
MORNING AG OUTLOOK
Mostly higher trade across the Ag space this AM ahead of today’s weekly export sales. Prices are trying to carve out a seasonal low as the market’s attention shifts to next week’s USDA production and WASDE updates. The Reuters poll indicates analysts expect slightly higher US soybean production while lower corn production. Energy prices have rebounded after yesterday’s collapse following the Democrats taking control of the US House and Senate in the mid-term elections. Spot WTI crude oil is up $2.05 per barrel at $90.15. Spot RBOB is up $.06 per gallon while HO is $.10 higher. Rain moved across the ECB and N. Midwest the past 24 hours with this system finally moving off to the east. Showers may linger in the N. Midwest and Great Lakes region another 24 hours otherwise dry conditions across the nation’s midsection for the next 7 days should enable harvest to wrap up in a timely manner. Generally favorable weather outlook in SA. Light showers in Buenos Aires otherwise mostly dry over the next week. In Brazil rains will favor the interior south and EC region where temperatures will remain below normal. Showers will be more scattered in the WC regions with temperatures above normal. The US $$ is little changed while holding within yesterday’s range. US equity markets are mixed.
Corn:
Dec-26 is up $.02 at $4.46 ¼ after briefly trading above yesterday’s high. Speculative traders bought 12.5k contracts yesterday, extending their long position to 63k. Open interest surged over 23k contracts. Last week’s ethanol production at 336 mil. gallons was the highest in 10 months. Corn usage at 112 mil. bu. was above the pace needed to reach the USDA usage forecast for a 2nd consecutive week. The Ave. production est. in the Reuters poll at 15.961 bil. bu. is down 73 mil. bu. from the USDA forecast in Oct-26. Ending stocks are expected to fall only 9 mil. bu. to 1.840 bil. I expect production to increase to 16.055 bil., while my ending stocks est. is at 1.870 bil. Export sales are expected to range from 32-70 mil. bu. Prices are trying to carve out a seasonal low, big sales to Mexico this week should help, lack of a threatening forecast in SA isn’t.
Soybeans:
Jan-27 beans are $.04 higher at $12.06 as prices tetter totter around $12.00. Jan-27 beans have closed lower for 8 consecutive sessions with next support is at the Aug-26 low at $11.80 ¾. Dec-26 meal is up $1.00 at $319.60 while Dec-26 oil is down another 45 points at 63.04 falling to a fresh 7-month low. Next support is near 61.50. Yesterday’s net selling across the complex took the combined MM long position down to 360k, still historically large however below the recent record of 558k. Speculative traders continue to shed length as SA forecasts remain non-threatening. O.I. was down 2-4k contracts in both beans and meal while surging 12.2k in soybean oil. Crush margins (Jan/Jan) are off another $.07 at $1.93 bu. with bean oil PV slipping to 49.7%. The Ave. production est. in the Reuters poll at 4.597 bil. bu. is up 35 mil. bu. from the USDA forecast in Oct-26. Ending stocks are expected to rise 16 mil. bu. to 331 mil. I expect production to increase to 4.592 bil., while my ending stocks est. is at 335 mil. Export sales are expected to range from 35-90 mil. bu. for soybeans, 250-500k tons of meal and 0-10k tons of oil.
Wheat:
Prices range from $.03-$.05 higher in 2-sided trade. CGO Dec-26 is up $.03 ½ at $6.02, Dec-26 KC is $.04 ½ higher at $6.37 ½ while Dec-26 MIAX is up $.03 at $6.20, all holding within yesterday’s respective ranges. Prices will remain sensitive to Chinese demand interest, or lack thereof. Ukraine’s grain shipments in Oct-26 rose 26% to nearly 1.1 mmt. Roughly 20% was moved thru Danube river ports with the balance through Western land borders. Markets nervously await tri-lateral peace talks between US, Russia and Ukraine in the UAE on Nov. 10th and 11th. I see US wheat ending stocks hold steady at 740 mil. bu. in next week’s WASDE report while the Ave. Reuters est. shows stocks rising 6 mil. to 746 mil. Export sales are expected to range from 12-24 mil. bu.
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