Written Commentary
MORNING AG OUTLOOK
Bean oil remains the stalwart holding slightly higher overnight while the rest of the Ag space is moderately lower. The market remains optimistic bean oil demand will grow under the proposed Z45 guidelines released yesterday by the US Treasury. The 170 page document is now open for public review over the next 60 days. The EPA ruling on mandated RVO’s and SRE is expected by the end of next month. While spot board crush margins were only slightly higher at $1.76 bu., bean oil PV jumped out to a 5 month high at 48.3%. Following a hot/dry January across much of EC and southern Argentina a more active weather pattern is expected into mid-February bringing the potential for much needed relief. How the rainfall lays out will be a key price determinant thru the rest of Q1. Favorable conditions in Brazil continue to fuel higher production forecasts. Dry across much of the central Midwest with only lite showers in the SE plains, Great Lakes region and portions of the ECB. Virtually no precipitation for the Central and Northern plains. Gradual warming across the Central US with above normal temperatures thru week 2 of the outlook. Spot crude is up $.40 a barrel. US $$$ is slightly higher while US equity markets are mixed.
Corn:
Mch-26 is down $.02 at $4.26 ½ near session lows however holding within yesterday’s range. Prices remain rangebound between $4.15-$4.40. Today’s EIA report could show a sharp drop in ethanol production last week due to the frigid cold. Production estimates range from 265-327 mil. gallons, vs. 327.5 mil. the previous week. USDA Feb-26 WASDE report next Tues. Lowered FOB offers from Argentina will start cutting into US exports. Brazilian ethanol producer Inpasa will ship its 1st cargo of DDG’s to China next week.
Soybeans:
Inside trade for Mch-26 beans currently down $.03 ½ at $10.62 ¼. Mch-26 oil is up 1 tick at 54.50 with resistance at the January high of 54.95. Mch-26 meal is down $2.80 at $289.20 holding just above the January low of $288.40. Most Brazilian production forecasts are landing above 181 mmt, vs. the USDA forecast of 178 mmt in Jan. I’d expect US ending stocks to rise 25 mil. bu. to 375 mil. next week on lowered exports.
Wheat:
Prices range from steady to $.05 lower across the 3 classes. CGO Mch-26 is down $.03 at $5.25 ¾, holding just above its 50 day MA. KC Mch-26 is down $.04 ½ at $5.30 ¼ with MA support just above $5.26. MIAX Mch-26 is down $.01 at $5.67 ¼. Both the 6-10 and 8-14 day outlooks look for above normal precipitation. After not making any wheat purchase yesterday, Jordan issued a new 120k mt tender that expires next Tues Feb. 10th. Frigid cold in E. Europe and Russia isn’t expected to have impacted their winter wheat crop as snow cover likely provided adequate insulation.
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