Written Commentary
MORNING AG OUTLOOK
Agricultural markets are mostly lower this AM with price movement minimal. Speculative traders were net sellers of corn yesterday, while moderate buyers across the rest of the Ag. space. EIA data on ethanol production later this morning while export sales are delayed until tomorrow. While Russia/Ukraine agreed to a prisoner swap, there was no breakthrough in drawing a cease-fire or the reopening of the Black Sea. Energy prices are lower in 2-sided trade with spot WTI crude oil down $.75 per barrel at $85.80 while spot RBOB is down $.01 per gallon with HO off $.02. Moderate rains across the Great Lakes region and ECB the past 24 hours, slowing what remains of harvest in the region. The WCB remains dry which should enable harvest to wrap up in a timely manner. Week 2 of the outlook has above normal precipitation across the Plains and WCB helping further ease drought conditions. Dry across Argentina the past 24 hours while scattered rains across much of Brazil. South American weather remains non-threatening. A good mix of rain, sunshine and above normal temperatures are favorable for planting progress and early crop development in Argentina. In Brazil heavier precipitation shifts into the WC and northern growing areas where it is more needed. The US $$ is little changed after posting a fresh 19-month high overnight. PPI data to be released on Friday. US stock indices are mixed.
Corn:
Dec-26 is unchanged at $4.48 in quiet 2-sided trade. Speculative selling yesterday took the MM short position to 17k contracts. Open interest was up 15k contracts despite heavy liquidation of the Dec-26 contract. EIA data is expected to show ethanol production held near 336 mil. gallons last week, unchanged from the previous week and if realized would be above the pace need to reach the USDA corn usage forecast for a 3rd consecutive week. Higher production est. for Brazil’s crop by the USDA continue to be absorbed by higher domestic usage. Their 141 mmt forecast for 2026/27 narrows the gap with Conab’s 148 mmt, which is expected to be updated on Friday. While this week’s USDA report may have raised the price floor, to see prices March-27 futures push above $4.70 will likely require a more threatening forecast in South America.
Soybeans:
Jan-27 beans are $.04 ½ lower at $12.26 ½ while holding within yesterday’s range. Next resistance is the 100-day MA at $12.52 ½. Dec-26 meal is down $1.60 at $328.10 while Dec-26 oil is off 15 points at 63.73 with both products unable to push above yesterday’s high. Crush margins have slipped $.03 to $1.92 bu. With the lower-than-expected US production and stocks there is little wiggle room for South American yields to come in below trend. Brazilian planting are approaching 75% while just underway in Argentina, so a lot of growing season ahead. China purchases likely sitting around 20 mmt. With the USDA raising US exports 25 mil. to 1.720 bil. bu. this week (46.8 mmt), leaves only 21.8 mmt to non-Chinese buyers, after China wraps up their 25 mmt purchases. That would be down 25% from YA. Speculative traders have been back in a buying mood across the soybean complex since the USDA reports on Tues. We’ve got their combined long position back up to 294k contracts.
Wheat:
Prices range from $.02 to $.06 lower across the 3 classes. Dec-26 CGO is down $.03 at $5.96 ½, Dec-26 KC is $.05 ½ lower at $6.33 ½ while Dec-26 MIAX is off $.03 ½ at $6.32. Higher global stocks support the recent price selloff however continued supply disruptions from the Black Sea region may reverse that trend. US wheat has become more competitive in the global marketplace. Look for further easing of drought conditions across the US plains as the winter crop heads towards dormancy. Algeria bought around 700k mt of wheat near $313/mt CF. Much of the grain is believed to be sourced from Argentina with smaller volumes from the Baltic Sea area (Russia) along with Bulgaria and Romania. SovEcon lowered their Russian export forecast another .7 mmt to only 36 mmt, below the revised USDA est. of 39 mmt. They don’t see Black Sea shipping return to normal until next Spring.
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