Mostly Lower Trade Ahead of Export Sales

MORNING AG OUTLOOK

Mostly lower trade across the A. space this AM ahead of the weekly export sales report.  Energy prices remain on the defensive as markets monitor developments in the Middle East.  Trump Administration officials remain hopeful they are nearing a 14 point memorandum of understanding to end the war with Iran while also establishing a framework for more detailed nuclear talks.  Energy prices are moderatly lower while holding within yesterday’s range.  WTI June-26 crude oil is down $3.25 a barrel near 91.80.  Spot RBOB is down $.07 a gallon while HO is off $.11.  Heavy rains in the SE the past 24 hours will continue to ease drought conditions.  Light precipitation in the far western plains while dry across much of the Midwest and N. plains.  Rainfall over the next week to favor the Gulf coast and SE regions with lighter amounts across the central Midwest and N. plains.  Overnight temperatures slipped into the mid-20’s in the N. plains while a few upper 20’s in far W. Kansas and E. CO.  Week 2 of the outlook shows above normal temperatures in the west shifting into the central Midwest.  Dry conditions in Argentina will support crop maturation and harvest activities.  Rains in Brazil to favor Southern MGDS into the interior south region.  Hot/dry conditions in the northern and WC growing areas causing moderate stress for the developing 2^nd corn crop.  The US $$$ is slightly lower while holding within yesterday’s range.  US stock indices are slightly higher coming off new record highs in the Nasdaq and S&P 500.

Corn: 

July-26 and Dec-26 are both $.04 lower at $4.64 ½ and $4.86 respectively.  July violated its 50-day MA at $4.66 with next support at $4.57 ½.  Support for Dec is at $4.83 ¾.  Yesterday’s ethanol production data was below expectations for a 3^rd consecutive week.  Export sales are expected to range between 32-70 mil. bu.  If energy prices have indeed peaked, I suspect corn could be overdue for a healthy correction.  The US crop is getting planted in a timely manner, US drought areas are low, higher production in SA may cut into new crop US exports while speculators are holding a sizable long position.  I look for old crop ending stocks to slip 25 mil. bu. in next week’s WASDE report to 2.102 bil. bu. on higher old crop exports

Soybeans: 

July-26 and Nov-26 beans are down $.04 ½ at $11.90 ¼ and $11.71 respectively.  July-26 meal is up $2.50 at $319.80 while July-26 oil is off 55 points at 74.47.  July beans are currently consolidating near its 50-day MA $11.89.  Nov beans have support at $11.53 ½.  Spot crush margins backed off $.10 yesterday to $3.66 ½ bu.  I’d expect the CFTC to print another record large, long position by MM’s in soybean oil and across the soybean complex.  Attention will now shift toward Pres. Trump’s meeting with Chinese leader Xi late next week in Beijing.  Without anymore old crop Chines purchases the USDA soybean export forecast at 1.540 bil. bu. is likely too large.  I suspect we’ll see another 15-25 mil. bu. demand shift from exports to crush keeping US stocks near 350 mil. bu.  Export sales are expected to range from 8-22 mil. bu. for soybeans, 150-400k tons of meal and -2-10k tons of oil.

Wheat: 

Prices range from $.04-$.10 lower with all 3 classes holding within yesterday’s range.  CGO July-26 is down $.04 at $6.13 ¼, KC July-26 is $.10 lower at $6.77 while MIAX July-26 is down $.04 at $6.88.  Freezing temperatures in areas of the SW plains are not believed to have caused significant damage to the HRW crop.  Canadian Mch. 31^st stocks at 19.47 mmt are up 12% from YA.  I’ll have my WW production est. for next week’s USDA Production and WASDE report later today.   Export sales are expected to range from 5-18 mil. bu.

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