Written Commentary
MORNING AG OUTLOOK
Higher trade across the Ag space to start off the week ahead of Wednesday’s USDA production and WASDE data with wheat being the upside leader. Russia continued to target Ukrainian grain export storage at the Odessa port this weekend. Energy prices are higher as traders monitor talks between Iran and Oman to reopen the Straits of Hormuz. Direct talks between the US and Iran are limited, if at all, as Pres. Trump stated he wants Iran to “feel economic pressure.” Spot WTI crude is up $1.30 a barrel near $79.50. Spot RBOB is up $.07 per gallon while HO is $.15 higher. Weekend rains across the central Midwest were highly variable with heaviest totals in the Great Lakes region. 100+ degree temperatures were recorded in the far WCB and Southern plains. Heavy rains this week of 1.5”-3” expected to stretch from W. SD and NE all the way across to the ECB. Temperatures holding above normal to the South while normal to below normal to the north. Continued hot/dry is the S. plains. Cooler than normal temperatures across Argentina and S. Brazil this week with precipitation limited to S. Brazil and EC Argentina. Warm and dry across C. and Northern growing regions of Brazil. Hot for all of Europe with only scattered rain in S. France and the Alps. The US $$$ is moderately higher while holding within Friday’s range. US equity markets are mixed and little changed.
Corn:
Sept-26 and Dec-26 are $.02 ½ higher at $4.41 ½ and $4.64 ½ respectively with both trading both sides of unchanged. Dec-26 seems to be building solid support just below $4.60 while MA resistance is just above $4.70. APK-Inform cut their Ukrainian grain export forecast 3.7 mmt to 39.4 mmt due to Russian missile and drone attacks. They lowered their corn production forecast .3 mmt to 29.8, while cutting their export forecast 1 mmt to 24 mmt. France’s corn crop ratings slipped another 3% to 31% G/E, well below the 67% YA. I look for US ratings to hold steady at 61% G/E. The Reuters poll shows traders expect US production to slip 66 mil. bu. to 15.934 bil. Old crop ending stocks are expected to drop by 21 mil. to 1.999 bil. with new crop stocks down 65 mil. to 1.725 bil.
Soybeans:
Sept-26 and Nov-26 soybeans are both $.05 ½ higher at $11.64 ½ and $11.81 ¾ respectively. Nov-26 continues to hold support above its 100-day MA at $11.71 ¼. Sept-26 meal is up $1.00 at $309.90 while Sept-26 oil is up 60 points at 68.84. Crush margins are up $.03 ½ at $2.74 per bu. The market is anticipating additional flash sales this AM as the USDA confirms rumored sales from last week. Chinese leader Xi is expected to visit Washington DC in 7 weeks. China’s Sinograin will auction off another 516k mt of soybeans on Aug. 12th, their 3rd such auction as they look to free up storage ahead of US arrivals. I look for US ratings to slip 1% to 62% G/E. The Reuters poll shows traders expect US production to slip 3 mil. bu. to 4.472 bil. Old crop ending stocks are expected to slip 9 mil. to 321 mil. with new crop stocks down 6 mil. to 304 mil.
Wheat:
Prices range from $.07-$.15 higher. CGO Sept-26 is up $.11 ¾ at $6.51 ½, KC Sept-26 is $.15 higher at $7.29 while MIAX Sept-26 is up $.08 at $6.87 ½. Last month’s surge to 2-3 year highs was driven by logistical issues, not by supply issues, something that a peace agreement could quickly solve. APK-Inform raised their Ukrainian production forecast .2 mmt to 22.6 mmt while lowering their export forecast to 13.5 mmt down from 15.3 mmt. Ukraine’s Ag. Ministry fears their grain export terminals may face a massive shortage of grain storage that could reach 11 mmt. The Reuters poll shows traders expect all US wheat production at 1.525 bil. bu. down 11 mil. from July. Winter wheat production is expected to fall 9 mil. bu. to 981 mil. Spring wheat production is expected to slip to 468 mil. down 7 mil. bu. Ending stocks are expected to drop 7 mil. bu. to 715 mil.
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