Escalating Tensions in Black Sea Region Surging Wheat

MORNING AG OUTLOOK

Higher trade across the Ag space this AM driven surging wheat prices.  Escalating tensions in the Black Sea region continue to threaten supply routes for feed grains, namely wheat coming from Russia.  Both countries have increased military strikes on grain storage and infrastructure along with cargo vessesls just as Russian wheat exports seasonally pick up.  Much above normal temperatures will continue to hold across the N. Plains and much of the central midwest through this weekend.  Rainfall over this period will favor C. Texas and the SE with lighter amounts for the central and ECB.  Little to no precipitation for the WCB and plain states where crop stress will accelerate.  Week 2 of the outlook shows below normal temperatures for the Great Lakes region and much of the NC midwest with normal to above normal precipitation for much of the nation’s midsection.  Scattered rains in C. Europe the past 24 hours while France and Spain remain dry with above normal temperatures holding for another week.  Seasonably warm temperatures in SA with rains limited to S. Brazil and EC Argentina.  Energy prices are little changed despite another round of US military strikes on Iran and blockade on their ports near the Straits of Hormuz.  Spot WTI crude oil is up $.45 per barrel near $79.80 while spot RBOB is up $.03 a gallon while HO is $.13 steady.  The US $$ is slightly higher in 2-sided trade while US equity markets are mixed.

Corn: 

Sept-26 and Dec-26 are both $.04 higher at $4.42 ½ and $4.64 ½ respectively.  Both are holding just below this week’s high.  EIA data is expected to show ethanol production rose to 323 mil. barrels last week, up from 321 mil. the previous week.  US exports should continue to hold up well as Brazil uses an increasing share of their crop domestically.  Yesterday Brazil’s energy council formally approved increasing the mandatory ethanol blend 2% to 32% for a 180-day period.  The last increase in Aug-25 raised it 3% to 30%.  US remains competitively priced in the global marketplace.  I look for China to eventually buy US corn, just don’t seem to be in a hurry at the moment.

Soybeans: 

Aug-26 beans are up $.02 ¼ at $11.95 while Nov-26 is $.03 ½ higher at $11.94 ½.  Highs overnight for both were just below $12.  Aug-26 meal is steady at $317.50 while Aug-26 oil is up 13 points at 72.53 while holding within yesterday’s range.  Crush margins were little changed at $3.02 per bu.  Markets will remain sensitive to China demand interest, or lack thereof.  US Gulf FOB offers hold $.10-$.30 over Brazilian offers thru Nov. despite no flash sale announcements yesterday.  Today’s NOPA crush report is expected to show members processed 204 mil. bu. in June, down from 208.8 mil. in May-26 while above the 185 in June-25.  Bean oil stocks are expected to slip to 1.653 bil lbs. down from 1.735 in May however, up from 1.384 bil YA.

Wheat: 

Prices range from $.16-$.21 higher with all 3 classes stretching out to their highest levels in nearly 2 months.  CGO Sept-26 is up $.18 at $6.63, KC Sept-26 is $.22 higher at $7.00 while MIAX Sept is $.15 ½ higher at $6.73 ½.  Yesterday Russia’s Union of Grain Exporters stated they will be able to meet their export commitments by rerouting cargoes along different routes however, the market seems skeptical as higher costs and logistical issues could prove problematic.  Supply disruptions from the world’s largest exporter of wheat coupled with lower production in the US and EU will likely keep the path of least resistance higher.  France’s Farm Ministry projects their 2026 soft wheat production at 32 mmt, down 4% from YA.  A 3% increase in acres is being more than offset by a 7% cut in yields.  Speculative traders were still short 46k contracts of SRW after yesterday’s trade.  Taiwan reportedly bought just over 98k mt of US milling wheat for Sept/Oct shipment.

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