Written Commentary
MORNING AG OUTLOOK
Mixed and rather quiet trade overnight as agricultural markets consolidate after yesterday’s strong start to the week. Yesterday’s higher trade fueled by huge speculative buying on indications of renewed Chinese interest in US soybeans. Crude oil is up $.20 a barrel. The US $$$ is moderately higher in 2 sided trade. US stock indices are also mixed and little changed. Metals are higher with new all-time highs in spot copper. Dry across Argentina past 24 hours with only scattered moisture across central and northern Brazil. Northern Argentina remains well watered while dry in the South. A continued good mix of rain and sunshine over the next week to 10 days to keep Brazilian crop prospects high. Yesterday’s CFTC-COT data showed speculative traders were net sellers in the week ended Tues. Dec. 30th.
Corn:
Mch-26 holding near its 50 day MA at $4.44 ¼ and near the midpoint of its 2 month range of $4.35-$4.55. Exports remain strong with commitments at a record 1.99 bil. bu. up 30% YOY vs. USDA forecast of up 12%. In the past 35 years US corn production has been cut 65% of the time from November to final. Final est out this afternoon. For now no change in usage for ethanol.
Soybeans:
Mch-26 beans up another $.03 to $10.65, meal is down a touch with oil slightly higher. Markets will likely need to see confirmation of Chinese purchases to maintain recent strength. Chinese purchases to date for 25/26 were likely near 8-8.5 mmt. New rumored sales would place that figure closer to 9-9.5 mmt approaching 80% of the 12 mmt they have committed to buying. Despite the Chinese buying I expect the USDA to cut their export forecast 50 mil. bu to 1.585 bil. in next Monday’s WASDE report. No change yet for Argentina. The current forecast for bean oil usage for biofuel production at 15.5 bil. lbs. appears way to high. Look for some shifting into other domestic usage and possibly exports.
Wheat:
Little change overnight across the 3 classes. Speculative traders remain heavily short CGO futures (-93k) while only moderately short in KC (-18k) and MIAX (-19k). While exports to date have been strong, up 18% YOY vs. USDA forecast up 9%, I see no change from the USDA with their current est. of 900 mil. bu. Rains this week in the US to favor the central and ECB. Lite rains for the Southern plains favoring the SE. Dry across the northern plains. Normal to above normal temperatures thru the first half of Jan-26.
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