All Green on The Agricultural Screen This AM

MORNING AG OUTLOOK

All green on the agricultural screen this AM, fitting for opening day at the Masters.  As you may have guessed, the higher trade is largely driven by a healthy rebound in energy prices.  Iran has accused the US and Israel of violating the “fragile” 2-week ceasefire agreement with Israel’s continued attacks on Lebanon.  More than 250 people were killed in Lebanon following Israel’s largest strikes since the war broke out.  Iran insists the ceasefire includes attacks on Lebanon while Israel begs to differ.  Meanwhile there is little evidence that the Straits of Hormuz has reopened as vessel traffic remains at a small fraction of pre-war levels.  Spot WTI crude oil is up $4.30 per barrel at near $98.75.  Spot RBOB is up $.05 per gallon while HO is up $.18.  Look for today’s updated drought monitor to show modest easing of drought conditions in winter wheat growing areas.  Moderate to heavy rains stretching from the Southern Plains northeast thru the Midwest into the Great Lakes region over the next week.  Dry in the SE where plantings should accelerate, while lighter precipitation in the WCB and N. Plains.  Week 2 of the outlook continues to lean toward above normal temperatures and precipitation across the nation’s midsection.  Argentina is expected to see a much-needed break from recent heavy rains.  Brazil will continue to see a favorable mix of rain and sunshine into mid-month.  US export sales and WASDE reports later this AM.  The US $$$ is moderately lower while holding within yesterday’s range.  US stock indices are slightly lower.

Corn: 

May-26 is up $.02 ¼ at $4.49 ½ while Dec-26 is up $.02 at $4.78.  May-26 is back above both its 50/100 day MA’s while still holding in $4.40-$4.75 range.  Traders expect little change in US ending stocks, holding near the March forecast of 2.127 bil.  We look for a 25 mil. bu. reduction.  Export sales are expected to range between 35-65 mil. bu.  The Rosario Grain Exchange raised their production forecast 5 mmt to 67 mmt, well above the current USDA forecast of 52 mmt, citing record yields and higher than expected acres.

Soybeans: 

May-26 beans are $.04 ½ higher at $11.66 ½ while Nov-26 beans are up $.04 at $11.56.  May-26 meal is up $1.70 at $315.80 while May-26 oil is up 43 points at 67.85.  Bean oil prices traded into the gap area created with yesterday’s gap lower open.  Crush margins plunged $.24 yesterday to $2.70 ½ bu. while bean oil PV fell 1% from yesterday’s all-time high at 52.8%.  Traders expect little change in US ending stocks, holding near the March forecast of 350 mil. bu.  We look for a 15 mil. bu. reduction on higher crush.  While energy/war headlines will still drive price volatility the markets attention will gradually shift toward the US planting season and Pres. Trump’s upcoming trip to China. With his trip already pushed back 6-7 weeks, I wouldn’t expect them to source anymore old crop soybeans from the US but hopefully can count on at least 25 mmt of new crop.  Export sales are expected to range between 8-22 mil. bu. of soybeans, 200 – 450k tons of meal and 0-12k tons of oil.

Wheat: 

Prices range from $.05-$.08 higher across the 3 classes.  CGO July-26 is up $.06 ¼ at $5.97 ½ while holding within yesterday’s range.  Initial support is at its 50-day MA at $5.87 ¼.  KC July-26 is up $.07 ¾ at $6.19 ¾ with support at $6.01 ¼.  The Reuters poll shows analysts expect US wheat stocks will slip to 923 mil. bu. down from 931 mil. in Mch-26.  We see no changes again this month.  Export sales are expected to range between 8-22 mil. bu.  Recent speculative selling has likely taken MM’s back into their comfort zone in being short SRW wheat.

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