Another Lower Start For Wheat

MORNING AG OUTLOOK

Corn: 

Minor weakness for corn this morning with crude pulling back as traders wait to see if President Trump will sign off on the 60-day cease-fire proposal. This week’s technical action has been disappointing with support breached and the market needs to have a strong close to finish out the week to ease technical pressure or speculative liquidation could continue. Even a sharp rally over the last 2 sessions in nearby EU corn futures, more than $1 a bushel in US terms, has not given the futures market any boost this morning. Favorable US weather is limiting the need for weather premium. Argentina’s harvest is 35% complete and US corn area under drought was unchanged this week at 25%, compared to 23% last year. Above normal temperatures will be moving into the northern half of the crop belt before spreading to the east in week 2. The central Plains and the southeast US will see most of the precipitation over the next 10 days as the high-pressure ridge dominates over the Great Lakes region. The heatwave in the western EU will continue for the next 5 days before milder conditions move in. EU corn conditions fell 2% this week. India is warning that the monsoon between June and September could hit 90% of normal, which would be an 11-year low for the period and could affect the corn crop. Flash floods in parts of China’s growing areas may damage newly planted corn. The 1st crop condition report of the season is expected on Monday next week. Initial conditions are likely to be relatively strong historically compared to recent years, especially in Iowa, Illinois, Indiana and the rest of the Great Lakes states, where drought is absent or at least very minimal.

support.

Soybean Complex:

Nearby bean oil made a new contract high overnight, even though crude is lower on the day, and vegoil continues to be the leader of the complex. Beans are finding support from strong domestic usage due to the high profit margins for crushers and the hope that China/US negotiations will end with a positive outcome for more US bean demand. The threat of another Argentine oilseed workers strike also looms in the background while the mandatory 2-week negotiation period is ongoing. US meal exports may get a boost from countries who don’t want to risk Argentina shipment delays if the strike reoccurs in 2 weeks. US bean area under drought was unchanged this week at 27%, compared to 17% a year ago. Heat will be moving into the northern Plains and northern Midwest over the next week, before spreading to the eastern belt in week 2. Precipitation is expected to be near normal over the Midwest with above normal chances in the southern tier of states. Argentina’s bean harvest is 85% complete and favorable harvest conditions are forecast for the next 2 weeks. Weekly export sales this morning are expected in a range of 150,000 – 800,000 tonnes for beans, 300,000 – 550,000 tonnes for meal and 0 – 10,000 for bean oil. NASS April crush will be released on Monday along with the 1st crop condition report of the season for beans. End of week and end of month positioning today may make for choppy conditions but this week’s turn higher in beans gives the bulls the edge into the weekend.

Wheat: 

Another lower start for wheat this morning and the market continues to show an inability to generate any upside momentum, although end of week and end of month today could result in some speculative short covering after a $0.60 decline in July Chicago over the last 7 sessions. The dominant news for wheat is whether the President will sign off on the 60-day Iran cease-fire. The ongoing war between Russia and Ukraine also seems to be heating up as Russian drones hit a Turkish cargo ship in the port of Odessa and also struck a Romanian residential building. If the Romanian strike was a targeted attack rather than a rogue drone, it would be a significant escalation of the conflict. Several weather issues around the globe are also getting attention with the heatwave in the EU prompting 3% decline in G/E conditions in France, Argentina’s production estimate down 23.4% year-over-year and China pushing a massive national mobilization of 800,000 combines, yes 800,000, to harvest 20 million ha of wheat which are at risk of damage due to heavy rain. Weekly export sales this morning are expected in a range of 200,000 – 500,000 tonnes. US winter wheat under drought dropped 1% this week to 69%, compared to 16% a year ago.

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