Main Price Drivers Are Lofty Production Estimates + Energies

MORNING AG OUTLOOK

Mixed trade across the Ag space this AM as wheat and soybean oil prices are higher while corn, soybeans and meal are lower.  The main price drivers overnight are lofty production estimates from StoneX and a sharp drop in energy prices as the UK and Europe are considering releasing strategic oil reserves.   WTI Nov-26 crude is down $3.35 a barrel at $89.55, however holding within yesterday’s range.  Spot RBOB is down $.11 per gallon while HO is off $.14.  Remnants of Hurricane Polo are expected to finish moving across the S. Midwest and ECB over the next 24-36 hours.  The WCB and Plain states will finally start to dry out enabling harvest to slowly resume after another round of heavy rain over the past 24 hours.  Dry and seasonally warm conditions look to hold into mid-Oct across a vast majority of the nation’s midsection.  Above normal precipitation to continue in S. Brazil with isolated flooding possible, 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.   The US $$ is slightly lower after stretching out to an 18-month high yesterday.  The US jobs report is expected to show that US payrolls expanded by 85k in Sept-26 with the unemployment rate holding at 4.1%.  US stock indices are higher.

Corn: 

Dec-26 is down $.02 ¾ at $4.99 ½ while holding within yesterday’s range.  Next support is at $4.88, the midpoint between the June low and the September high.  StoneX is forecasting US corn production at 16.115 bil. bu. with an average yield of 182.1 bpa.  While well above the Sept-26 USDA forecast of 15.80 bil. bu. the StoneX est. is down 92 mil. bu. from last month.  Leading up to the USDA report next Friday, I suspect StoneX will once again be the outlier to the high side.  Corn used for ethanol production is Aug-26 at 478 mil. bu. was at the high end of expectations and above the 459 mil. bu. used in Aug-25.  I have total usage Sept-25 thru Aug-26 at 5.547 bil bu, 3 mil below the current USDA est.  Bulls remain hopeful for Chinese demand while exports continue to run well below the pace needed to reach the current USDA forecast of 3.275 bil.

Soybeans: 

Nov-26 beans are down $.07 ½ at $12.76 ½ while carving out a new 5-week low overnight.  Dec-26 meal is down $4.80 at $348.50 while Dec-26 oil is up 35 points at 67.73.  StoneX is forecasting US soybean production at 4.648 bil bu with an average yield of 54.1 bpa, well above the Sept-26 USDA forecast of 4.535 bil. bu. and up 101 mil. bu. from their Sept-26 forecast.  Like corn, I suspect the StoneX forecast will be the outlier to the high side.  Census crush in Aug-26 at 210 mil. bu. was in line with expectations while bringing cumulative 2025/26 crush to 2.645 bil bu., 10 mil below the USDA estimate of 2.655 bil.  The Ave. daily crush rate fell to a MY low at 6.77 mbd, down from 7.16 mbd in July, however above Aug-25 at 6.39 mbd.  Soybean oil stocks fell to 1.696 bil. lbs., below expectations of 1.80 bil.  Look for the USDA to shift more bean oil demand from other domestic uses into the production of biofuels.  We’ll have our production estimates early next week.  As harvest begins to open up across the WCB look for some of these huge basis premiums to start crumbling, if they haven’t already.

Wheat: 

Prices are $.02-$.05 higher in 2-sided trade.  CGO Dec-26 is up $.05 at $6.88, Dec-26 KC is $.02 higher at $7.39 ½, while Dec-26 MIAX is also up $.02 at $6.99.  Russian Pres. Putin formally rejects proposals to halt military strikes on energy refineries and vessels attempting to navigate through the Black Sea while Turkey and the UN attempt to jump start new peace negotiations.  Ukraine’s Ag. Minister expects his countries’ winter crop seedings, including winter wheat, will fall 15% this year.  After Estonia banned the transit of Russian (and Belarusian) grain through their country to ports along the Baltic Sea, Latavia and Lithuania are considering doing the same, further restricting Russia’s ability to export wheat.  US winter wheat acres in drought slipped 1% to 57% while spring wheat acres in drought fell 4 % to 48%.  I’d expect a much steeper drop in WW acres in drought next week.

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