Written Commentary
MORNING AG OUTLOOK
Mostly higher trade across the Ag space ahead of today’s USDA updates. The US $$$ is moderately lower while the US stock market braces for a lower opening after the Dept of Justice has opened a criminal investigation into Fed. Chair Jerome Powell. Chairman Powell maintains the investigation is another attempt by the Trump Admin to pressure the central bank to lower rates while threatening their independence. Friday’s CFTC data showed MM’s were moderate to heavy sellers of soybeans, meal and CGO wheat in the week ended Jan. 6th. The Supreme Court is expected to rule on the legality of the Trump Admin use of tariffs by Wed. At risk is roughly $150 bil in tariff revenue so far collected by the Fed Govt under the IEEP Act. Rains across S. Brazil this weekend will shift into SC areas this week keeping crop prospects high. Rains in Northern Argentina this weekend. A few chances for needed rain across central and southern area’s this week however coverage will be spotty. Spot crude oil is down $.50 barrel.
Corn:
Mch-26 is up $.02 near $4.48 as it reached a 2 week high overnight. Traders expect US production will fall 200 mil. bu. to 16.552 bil. with the Ave yield slipping to 184 bpa. Ending stocks to drop 57 mil. to 1.972 bil. Much of the lower production will likely be offset by lower feed usage. Dec. 1st expected to come in a record high of 12.962 bil. well above the 12.075 bil. YA. Korean importers have bought a few more cargoes of feed corn near $250/mt CF. AgRural reports Brazil’s 2nd crop planting are underway in Mato Grosso.
Soybeans:
Inside trade for Mch-26 beans as it holds near $10.67 up $.05. Mch-26 meal is down $1 just below $303. Overnight prices were capped at their 100 day MA. Mch-26 oil is up 70 points at 50.40 holding just below LW’s high at 50.43. After buying another 10 cargoes of US beans on Friday, traders place total Chinese purchases between 10-11 mmt, nearing the 12 mmt total. Most of Friday’s purchases are for shipment from the US Gulf in April/May. China’s Sinograin will auction off another 1.1 mmt of soybean on Tues. as they continue to free up storage for US imports. Likely to see additional flash sales early this week. The Reuters poll shows analysts expect US bean production to drop 24 mil. bu. to 4.229 bil. with the Ave yield slipping to 52.7 bpa. The Ave. guess for ending stocks at 292 mil. up only 2 mil. from Nov-26 however the range is rather wide from 245 to 350 mil. Despite China returning as a buyer of US beans probably not enough to prevent the USDA from lowering their current US export forecast of 1.635 bil. AgRural est. Brazilian harvest at .6%.
Wheat:
Prices are $.04-$.08 higher across the 3 classes. CGO Mch-26 is challenging resistance at $5.25. Mch-26 KC traded to a 2 month high near $5.30. Dryness in the US plains continues to provide underlying support. US ending stocks expected to slip 5 mil. to 896 mil. bu. Winter wheat acres are expected to drop 2% to 32.413 mil. acres which if realized would be a 6 year low. Global stocks are expected to rise 1.1 mmt to 276 mmt. The MM short position in CGO at just over 107k contracts is the largest since Oct-25.
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