Written Commentary
MORNING AG OUTLOOK
Mostly higher trade across the Ag space this AM ahead of the weekly export sales data. I felt yesterday’s USDA data was bearish for corn, neutral for wheat while supportive for soybeans. Huge speculative selling in corn led to lower closes across the board. Yesterday’s selling will not be reflected in tomorrow’s CFTC-COT update. Heavy precipitation continues to pull across the S. Plains and WCB into the NC Midwest. Isolated flooding is likely in areas of SE NE, NE KS and SW IA. Remnants of Hurricane Polo will continue to bring heavy rain across the central Midwest as it slides east the next 24-48 hours. As dryer conditions settle in, harvest progress will likely be stalled for a few more days as heavy rains soak in and/or runoff. Week 2 of the outlook shows below normal precipitation across the Midwest. Above normal precipitation to continue in S. Brazil while scattered showers in the WC region along with central Argentina. Seasonally warm for nearly all of Europe while rains bring some drought relief to Spain and France. Crude oil prices are higher despite exports from the Middle East increasing toward prewar levels. WTI Nov-26 crude is up $1.30 a barrel at $91.75, RBOB is up $.03 per gallon while HO is $.06 lower. The US $$ has surged to an 18-month high. US stock indices are steady to higher.
Corn:
Dec-26 is up $.02 ¼ at $5.03. Next support is at $4.88, the midpoint between the June low and the September high. Yesterday’s EIA data showed ethanol production fell to 296 mil. gallons last week, the lowest in 8 months, however, in line with expectations. This afternoon’s USDA census data is expected to show corn usage for ethanol in Aug-26 reached 470 mil. bu. vs. 459 mil. Aug-25. Ukraine’s corn exports in Sept-26 at 1.929 mmt were more than double the .913 mmt in Sept-25. Bulls remain hopeful the lower prices may stimulate demand interest from China ? The markets focus will shift back to US harvest progress (or lack thereof) and the USDA production update next Friday. Export sales are expected to range from 20-55 mil. bu.
Soybeans:
Nov-26 beans are up $.01 in 2-sided trade. Dec-26 meal is down $.30 at $356.60 while Dec-26 oil is off 35 points at 67.93. Bean prices will continue to be sensitive the pace of Chinese soy purchases which we estimate to be at 14 mmt. Crush margins are off $.03 at $2.40 bu. Delayed harvest in the WCB continues to keep crusher bids firm with soybean meal supplies scarce. Combined biodiesel and RD production in July-26 was a new record high at 528 mil. gallons up 2.6% from June. Soybean oil usage was also a record high at 1.687 bil. lbs. bringing cumulative usage over the first 10 months of the 25/26 MY to 12.015 bil. lbs. up 24% YOY. Usage will only need to reach 1.393 bil lb in Aug and Sept to reach the USDA forecast of 14.80 bil lbs. Look for the USDA to raise this forecast in next Friday’s WASDE report. Census crush from Aug-26 released after today’s close is expected to reach 211 mil. bu. vs. 198 mil. in Aug-25. Bean oil stocks are expected to land at 1.80 bil lbs. vs. 1.788 in Aug-25. Export sales are expected to range from 20-50 mil. bu. of beans, 200-500k tons of meal and 0-10k tons of oil. Tighter US stocks provide even less room for US yields to slip from the current USDA est. of 52.8 bpa.
Wheat:
Prices are $.04-$.07 higher. CGO Dec-26 is up $.04 at $6.80, bouncing after reaching a fresh 7-week low. Dec-26 KC is $.07 higher at $7.40 having held support at its 100-day MA at $7.28 ½. Dec-26 MIAX is $.05 ½ higher at $6.99 while holding within yesterday’s range. My spring wheat production forecast at 460 mil. bu. was the lowest in the Reuters survey and I was 10 mil. bu. too high. Only 67% of the planted WW acres were harvested for grain, as abandonment at 33%, was the highest since the Dust Bowl a century ago. Export sales are expected to range from 8-18 mil. bu. Yesterday SovEcon cut Russia’s wheat export forecast another 4.7 mmt to 36.7 mmt, well below the USDA forecast of 43 mmt. Ukraine’s wheat exports in Sept. at 1.1 mmt were down from 2.05 YA. July-Sept shipments at 2.8 mmt are down 41% YOY.
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