Early Weakness Driven by Lofty Production Estimates

MORNING AG OUTLOOK

Mixed trade across the Ag space this AM after a lower start overnight.  Early weakness was driven by lofty production estimates from StoneX and lack of supportive data from the USDA crop progress and condition reports.  A Reuters survey shows traders expect little change in old crop corn and soybean stocks, while lower production and inventories from the 2026 harvest.  Energy prices are higher as tensions in the Middle East remain elevated.  Spot WTI crude oil is up $2.50 a barrel near $95.50 while trading to a new contract high.  RBOB is up $.03 per gallon with HO $.16 higher.  Heavy rains across central IA the past 24 hours with many areas picking up 2+ inches.  Lighter amounts in surrounding areas.  Rain will continue to favor the central Midwest and ECB over the next week, slowing crop maturation and early harvest efforts.  Week 2 of the outlook leaning below normal temperatures across the N. Midwest with normal to above normal precipitation for much of the nation’s midsection.  Moderate to heavy rain across the interior south of Brazil.  Dry for much of Argentina.  Cool for much of SA growing areas.  Hot and dry for Spain and France with light to moderate showers for central and Eastern Europe.  Continued dry for much of Ukraine.  The US $$ is moderately lower while holding just above last month’s low.  US equity markets are lower.

Corn:

Dec-26 futures have turned $.03 lower at $5.30 ½, holding support overnight just above last week’s low at $5.26 ½.  StoneX is forecasting US corn production at 16.207 bil. bu. with an average yield of 182.9 bpa.  This was up 47 mil. bu. from their previous estimate and 194 mil. bu. above the USDA forecast in August.  The Reuters poll expects corn production will slip to 15.785 bil. bu., down 248 mil. from the USDA est. of 16.013 bil.  The average yield is expected to fall to 178.2 bpa from 180.7 bpa in August.  Ending stocks are expected to slip to 1.528 bil. vs. USDA est. of 1.653 bil.  Crop ratings slipped 1% to 56% G/E.  Composite ratings improved in 5 states, declined in 10 while holding steady in 3.  Overall ratings held at the crop cycle lows, just below the historical average.  96% of the crop is in the dough stage, 76% is dented while 25% of the crop is mature, all at or ahead of the 5-year Ave.  Harvest has reached 5% vs. 4% YA and 5-year Ave. of 3%.  Updated ratings would suggest an average US yield of 179.1 bpa with production at 15.866 bil. bu. down 48 mil. bu. from last week.

Soybeans: 

Nov-26 beans are $.01 lower at $13.15 ¼ in 2-sided trade while holding within yesterday’s range.  Oct-26 meal is up $1 at $344.30 while Oct-26 oil is down 12 points at 70.10. StoneX is forecasting US soybean production at 4.547 bil. bu. with an average yield of 53.0 bpa.  This was up 77 mil. bu. from their previous estimate and 28 mil. bu. above the USDA forecast in August.  The Reuters poll predicts soybean production will slip to 4.501 bil. bu., down 18 mil. from the USDA est. of 4.519 bil.  The average yield is expected to fall to 52.5 bpa from 52.7 bpa in August.  Ending stocks are expected to slip to 298 mil. vs. USDA est. of 320 mil.  Crop ratings held steady at 58% G/E, vs. expectations for a 1% decline.  Composite ratings held at crop cycle lows while matching the historical average.  Ratings improved in 8 states while declining in 10.  26% of the crop is dropping leaves vs. YA and 5-year Ave. of 20%.  Updated ratings suggest an average US yield of 52.5 bpa with production at 4.503 bil. bu., down 12 mil. from last week.  Chinese purchase of US beans are likely approaching 12 mmt ahead of Xi visit to Washington later this month.  Higher new crop demand would leave little wiggle room for US yields to fall from the current 52.7 bpa forecast, or risk sharply lower stocks and even higher prices.

Wheat: 

Prices range from $.01 lower to $.05 higher in 2-sided trade overnight.  CGO Dec-26 is $.01 ½ lower at $7.45, KC Dec-26 is steady at $8.19 while Dec-26 MIAX is up $.04 at $7.58.  Russia and Ukraine continue to target port infrastructure with drone and missile attacks with no end in sight.  Ukrainian drones reportedly killed 4 at Russia’s port of Novorossiysk overnight.  Latavia is reportedly considering a 300% tariff on Russian and Belarusian grain shipments that transit thru Baltic countries.  A day after Saudi Arabia cancelled their tender for 535k mt of wheat, Pakistan issued a tender for 750k tons with a deadline of Sept. 16th. Spring harvest advanced to 86% complete, vs. YA and the 5-year Ave. of 83%.  Winter wheat plantings at 2% are below the 4% pace from YA and the 5-year Ave. of 5%.  The Reuters poll shows traders expect little change in wheat stocks which were est. at 717 mil. bu. in Aug.

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