Written Commentary
CORN
Prices recovered late to close $.01-$.02 higher in choppy 2-sided trade. Spreads also firmed, however remain near their lows with the Goldman roll beginning tomorrow for the Sept-26 contracts. Sept-26 and Dec-26 both fell to 4-week lows before recovering. Argentine ports resumed normal operations yesterday following a work stoppage on Tues. as maritime pilots forced a 24-hour work stoppage. Despite legal challenges, Brazil has moved ahead with their mandated higher ethanol blend in their nations fuel supply. E32 took effect Aug. 1st up from a 30% blend. Current corn-based ethanol capacity in Brazil is roughly 13 bil. liters annually. With another 20+ plants at various stages of construction, capacity will likely reach 23-25 bil. by 2035. Corn usage for ethanol production currently estimated at 23 mmt (16%) of their crop is expected to rise to 38-40 mmt over the next decade. US corn exports will likely remain strong for years. Expana lowered their EU production forecast another 4.6 mmt to 49.1 mmt, well below the USDA est. of 57.5 mmt. US exports at 45 mil. bu. was at the low end of expectations. Old crop sales at 5 mil. bu. was a MY low while bringing commitments at 3.429 bil. bu. up 23% YOY vs. the USDA forecast up 16%. Commitments represent 103% of the USDA forecast, above the historical average of 97%. Pace analysis would suggest the USDA export forecast at 3.325 bil. is still 25-50 mil. bu. too low. New crop commitments have reached 380 mil. bu. falling behind the YA pace at 464 mil. I’ll have my production and carryout estimates for the Aug-26 USDA tomorrow.
SOYBEANS
Prices were slightly higher across the complex with beans $.02-$.04 higher, meal was up $1-$2 while oil was steady to 25 points higher. Soybean and meal spreads firmed while oil spreads were weaker. Sept-26 and Nov-26 soybeans both held within yesterday’s range while Nov-26 continues to build support at its 100-day MA at $11.70 ¼. Corn and soybean price appreciation in the short term will likely be limited due to mostly favorable US weather. There were heavy rains the past 24 hours in S. IA along with the northern half of MO. Precipitation into early next week will favor E. IA into the Great Lakes region. Rain will be much more scattered in the S. Midwest and WCB where temperatures continue to hold at above to much above normal readings. Week 2 of the outlook calls for normal to above normal rain across the nation’s midsection. Sept-26 crush margins were little changed at $2.70 ½ bu. For a 2nd consecutive session, cash sources suggest China was actively securing a large volume of US soybeans. Today’s flash sale from the USDA was only 122k mt (4.5 mil. bu.) I expect we’ll see much larger flash sales tomorrow into early next week as they continue to work on reaching their 25 mmt commitment. Chinese leader Xi is expected to visit Washington DC in 7 weeks. US Gulf FOB offers continue to run $.20-$.30 bu. below Brazilian offers. US export sales at 34 mil. was below expectations. Old crop sales at only 1 mil. was also a MY low bringing commitments to 1.533 bil. down 19% vs. the USDA forecast of down 20%. China’s new crop purchases of 330k tons took commitments to 3.1 mmt (114 mil. bu.). There are another 3.326 mmt (122 mil. bu.) to unknown. New crop commitments jumped to 308 mil. bu., a 4-year high while up 134% YOY. Meal sales at 248k tons were in line with expectations. Old crop commitments are up 14% YOY vs. the USDA forecast of up 12%. Oil commitments at 835 mil. lbs. are down 65% vs. USDA forecast down 60%.
WHEAT
The lower trade was seemingly driven by sharply lower FOB offers from both Ukraine and Russia however that will likely not offset surging freight/insurance costs, if they can be obtained at all. Last month’s surge to 2 to 3-year highs was driven by logistical issues, not by supply issues, something that a peace agreement could quickly solve. Prices across the 3 classes fell to 3-4 week lows. CGO Sept-26 was $.11 lower at $6.31, KC Sept-26 was down $.13 ¾ at $6.99 ¾, while MIAX Sept-26 was off $.12 ½ at $6.71. Algeria reportedly bought up to 720k mt of wheat yesterday with prices near $289-$290/mt CF. A Russian missile damaged a vessel in the Black Sea carrying Ukrainian wheat. Ukraine is reportedly working with Romania to shift export shipments through their Constanta port. Expana lowered their EU soft wheat production forecast by 1.5 mmt to 126.8 mmt. US spring wheat acres in drought surged 16% to 58% (up 33% in 2 weeks). Durum acres in drought jumped 23% to 49%. Wheat sales at 11 mil. bu. were at the low end of expectations. YTD commitments at 265 mil. are down 30% from YA vs. the USDA forecast of down 15%.
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