Written Commentary
MORNING AG OUTLOOK
Mostly higher trade across the Ag space overnight as spot crude oil, RBOB and heating oil all jump to new contract highs. Crude oil is still holding just shy of the June-25 high of $78.40. Escalating war in the Middle East threatens to disrupt the flow of fertilizer as plants in the region shut down while the Straits of Hormuz, the conduit for roughly a third of the global trade of soil nutrients, remains closed. Urea prices have shot up roughly $80 to $550 per ton since last weekend. Export sales later this AM A Reuters poll shows traders expect little change in US ending stocks in next Tues. USDA WASDE report. Rains across N. Brazil will slow the remaining soybean harvest and 2nd corn plantings. The near term outlook is dry for S. Brazil with better chances for beneficial rain in week 2 of the outlook. Argentina is trending wetter in the north, dryer in the South. Heavy rains continue to track across the S. Midwest and ECB. Accumulated totals of 2-5” are expected over the next 7 days stretching from the SE plains and Delta region into the central and eastern Midwest. Much lighter totals for the NW third of the corn and soybean belt. The US $$ is moderately higher while US stock indices are slightly lower.
Corn:
May-26 is up $.01 ½ at $4.45 ¼ while holding within yesterday’s range. New crop Dec-26 is up $.02 at $4.72 ¼. I look for US ending stocks to rise 25 mil. bu. to 2.152 bil. in next week’s WASDE report on lower usage for ethanol production. Export sales are expected to range from 30-64 mil. bu. For now spot May-26 has rejected trade above $4.50.
Soybeans:
May-26 beans are up $.03 at $11.72 ½ holding within yesterday’s range. May-26 meal is down $1 at $309 with support at $305.70. New contract high for May-26 oil overnight as it looks to extend a higher close to a 9th consecutive session. Fresh 18 month high on the weekly chart. I find it highly unlikely we’ll see additional Chinese buying of US beans with Gulf FOB offers running $.80-$1.30 over Brazilian offers into the summer months. That said however I expect no changes to the USDA export forecast of 1.575 bil. bu. I look for a modest 10 mil. bu. cut in ending stocks to 340 mil. bu. on higher crush. Look for some shifting of bean oil demand away from biofuels into other domestic usage and/or higher stocks. No big changes expected for SA production. Export sales are expected to range from 10-35 mil. bu. of beans, 200-450k tons of meal and 0-16k tons of oil. Canadian canola acres are expected to rise 800k to 22.3 mil. with the range of est. 22.1-22.5 mil.
Wheat:
Prices range from $.05 to $.08 higher. CGO May-26 is up $.05 ½ at $5.73 ¾. KC May-26 is up $.07 at $5.79 ½ . Still no deliveries against Mch-26 CGO. Canadian wheat acres are expected to slip to 26.4 mil., down from 26.9 YA. The range of est. is 26 – 29.2 mil. Export sales are expected to range from 10-18 mil. bu.
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