Ag Price Mostly Higher Ahead of Today’s USDA Reports

MORNING AG OUTLOOK

Agricultural prices are mostly higher ahead of today’s USDA production and WASDE data.  Markets will also be sensitive to any headlines coming out of the tri-lateral peace talks between the US, Russia and Ukraine in the UAE.  The reopening of the Black Sea for agricultural shipments is undoubtedly on the list of items covered in Abu Dhabi.  Energy prices remain on the defensive as Pres. Trump has indicated renewed military strikes on Iran are unlikely.  Spot WTI crude oil is down $1.50 per barrel at $85.30 having traded to a 2-month low overnight.  Spot RBOB is down $.03 per gallon with HO off $.15.  US corn and soybean harvest was at the low end of expectations while wheat conditions improved more than expected.  Dry across the nation’s midsection the past 24 hours.  Light rains in the Great Lakes region and ECB the next 24-48 hours otherwise dry across Midwest through the end of the week.  This should enable harvest to wrap up in a timely manner.  A good mix of rain and sunshine along with above normal temperatures in Argentina will be favorable for planting progress and early crop development.  In Brazil precipitation to become less frequent in the South while heavier in the North, also favorable for crop development.  The US $$ is slightly higher in 2-sided trade ahead of key US inflation data this week.  Today’s CPI reading is expected to show consumer prices rose by .3% in Oct-26, down from a .6% increase in September.  Core CPI is expected to be up .2%.  US stock indices are mixed.

Corn: 

Dec-26 is up $.02 ¾ at $4.42 while holding within yesterday’s range.  Next support is at the contract low of $4.25 ¾.  Money managers sold 9k contracts yesterday extending their short position to 31k contracts.  Open interest was down just over 5K contracts.  Harvest advanced only 7% to 81% complete, below the 5-year Ave. of 86%.  Biggest delays remain in the NW where just over 1.7 bil bu still in the fields across IA, MN, NE and SD.  The Reuters poll shows an average production est at 15.962 bil bu., down 72 mil. bu. from October.  Ending stocks are expected to fall only 9 mil. bu. to 1.840 bil.  I’ve got production at 16.055 bil., with ending stocks growing to 1.870 bil.  I think we’ll likely see a narrowing of the USDA Argentina forecast, which at only 55 mmt is well below the BAGE est. of 62 mmt.  In Brazil, the gap between USDA and Conab expected to remain wide currently at 139 and 148 mmt respectively.  The USDA Baseline projections show US farmers will plant 95.5 mil. acres of corn in 2027, down from 96.8 mil. this year.

Soybeans: 

Jan-27 beans are up $.01 ¼ at $11.89 ½ while holding within yesterday’s range.  Next support is the Aug-26 low at $11.80 ¾.  Dec-26 meal is $1.30 higher at $322 after stretching out to its highest level in a week.  Dec-26 oil is down 37 points at 61.66 holding above last week’s low at 61.34.  After selling 1k contracts yesterday, I’ve got the MM long position in soybean oil down to only 24k contracts, the lowest in 9 months.  Crush margins are steady at $2.00 bu. with bean oil PV slipping to 49%.  The Ave. production est. in the Reuters poll at 4.597 bil bu is up 35 mil. bu. from the USDA forecast in Oct-26.  Ending stocks are expected to rise 16 mil bu to 331 mil.  I’ve got production at 4.592 bil., with stocks at 335 mil.  I’d estimate Chinese purchases of US beans at 19.5-20 mmt.  Chinese soybean imports from all sources in October at 7.35 mmt was down 22.5% YOY.  YTD imports at 93.5 mmt are down 2.2%.  The USDA Baseline projections show US farmers will plant 87.5 mil. acres of soybeans in 2027, up from 86.9 mil. this year.

Wheat: 

Prices range from $.02 lower to $.04 higher.  CGO Dec-26 is up $.01 at $5.89, Dec-26 KC is $.04 higher at $6.36 ½, while Dec-26 MIAX is off $.01 at $6.21.  I see US wheat ending stocks hold steady at 740 mil. bu. while the Reuters poll shows stocks rising 6 mil. to 746 mil.  After cutting their export forecast 25 mil. bu. last month, I see the USDA holding steady this month at 750 mil.  The recent price plunge has left US wheat much more competitive in the global marketplace.  Jordan passed on making any purchases in their recent 120k mt tender.  US winter wheat plantings at 89% are just below the 5-year Ave. of 90%.  Ratings improved 5% to 49% G/E, vs. expectations of a 2% improvement.  Ratings jumped 11% in OK, 9% in TX, and 7% in CO.  Without some progress on peace between Ukraine/Russia or at least some progress on reopening the Black Sea I’d expect the market to inject additional War premium.

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