Written Commentary
CORN
Prices are mixed and within a penny of unchanged. Both July-26 and Dec-26 are both traded to fresh 3-week highs before settling back. July-26 remains rangebound between $4.50-$4.80. The BAGE held their Argentine production forecast steady at 61 mmt, well above the USDA est. of 52 mmt. Harvest progressed only 2% in the past week to 26.5% near its historical average while below the YA pace of 30%. US exports remain strong, up 28% YTD vs. the USDA forecast of up 15.5%. I’d expect US corn planting to land between 20-22% through Sunday. The expanding heat and dryness across central and northern Brazil is helping provide a floor of support below the corn market. Dec-26 corn has gained on Nov-26 soybeans for the past 2 weeks.
SOYBEANS
A late recovery enable prices to close higher across the complex. Beans were $.01-$.04 higher, meal was steady to up $3 while oil closed 20-30 points higher. Spreads firmed across the complex. July-26 beans rejected trade above $12 yesterday while settling back towards the mid-point of its $11.55-$12 range. Longer term support is at its 100-day MA at $11.42 ¼. July-26 meal closed right at its 50-day MA. Oil prices have leveled off after reaching 3 ½ year highs earlier in the week. Crush margins jumped another $.07 ½ to a new modern day high at $3.41 bu. Bean oil PV slipped back to 52.6%. No significant change with the standoff over the Straits of Hormuz. While the fragile US/Iran ceasefire appears to be holding, the US Naval blockade on Iranian ports continues. Vessel traffic through the narrow passageway is limited with peace talks uncertain however late reports suggests Iran is sending a top diplomat to Pakistan this weekend for a 2nd round of negotiations. Speculative traders were moderate sellers across the soybean complex the past few sessions. Despite this look for the CFTC to print another record large, long position held by MM’s in soybean oil, and a combined record long position across the complex. The markets attention will start shifting to Pres. Trump’s meeting in Beijing with Chinese leader Xi next month. Without additional Chinese purchases the USDA export forecast will likely be lowered again, which will likely again be offset by higher crush. The BAGE increased their Argentine production forecast .1 mmt to 48.6 mmt, just above the USDA forecast of 48 mmt, while harvest has reached 10%. At least 18 vessels are now being held up outside a key Argentinian port as a trucker strike has blocked supply channels to the key export hub.
WHEAT
Prices ranged from $.09 lower in KC to $.02 higher in MIAX. CGO July-26 has seen 5 consecutive sessions of higher lows and higher highs while also scratching out a fresh 3 week high before pulling back. KC jumped out to a fresh 22 month high before pulling back. Inside trade for MIAX July-26. Spreads were mixed however KC’s premium to CGO jumped out to a new high overnight just above $.63 bu. before pulling back. Best early guess on HRW production is 615 mil. bu. with an average yield of 40.5 bpa. Both the lowest in 3 years. Would likely need to see production well below 600 mil. for July-26 KC to reach $7.00. IKAR lowered their Russian production forecast 1 mmt to 90 mmt, while also lowering their export forecast 1 mmt to 46.5 mmt. Saudi Arabia is tendering for 710k mt of milling wheat for Jun-Aug shipment. Results of the tender are expected on Monday. Speculators can’t decide if they want to go long or short CGO wheat, so they are doing neither. MM long position in today’s CFTC update could be the largest in 3 years.
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