Written Commentary
MORNING AG OUTLOOK
Corn:
Corn is bouncing back from yesterday’s weakness this morning as crude rallies after the US struck several Iranian targets overnight. Also, this week’s break has pushed prices down to levels where global export demand is picking up. Unlike beans and wheat, corn has a strong export story without any additional China demand. If China does lower tariffs on US feedgrains, it could be a significant bullish development. The central, northern, and eastern Midwest remain mostly dry over the next 10 days and rain will be heaviest in the southeast and Tennessee Valley. The weather pattern overall remains favorable, but the high-pressure ridge will be watched closely in week 2 to see if it’s going to move out. SovEcon lowered Russian corn production for the season 1.4% year-over-year to 14.6 million tonnes. Weekly export sales will be delayed until tomorrow morning. Western Europe’s hot/dry pattern will last through the weekend but there are better chances for rain next week. Weekly ethanol production today is expected at 1.108 million barrels per day, slightly below last week at 1.111 and stocks 24.806 million barrels, compared to last week at 24.875.
Soybean Complex:
A higher start for the complex this morning, which can be attributed to higher crude and the threat of an oilseed workers strike in Argentina. Also, there is continued talk that China could lower tariffs in the coming days, paving the way for additional US Ag demand but China bought another 4 cargoes of Brazilian beans overnight. Yesterday, Argentina’s oilseed union went on strike over salaries for a few hours before the government imposed its 15-day mandatory conciliation period. Argentina’s soy product exports have been lagging behind the typical average pace for this time of year, and a strike would worsen the situation. Brazil has overtaken Argentina as the leading global exporter of meal. The US will send a delegation to India next week to try to finalize a trade deal. US weather through the weekend will be wet in the southeast, Tennessee Valley and central Plains. The bulk of the central, northern and eastern Midwest will remain dry under high-pressure, which for now, is favorable for crops. Weekly export sales will be delayed until tomorrow.
Wheat:
A poor finish for wheat yesterday and Chicago wheat is seeing a minor rebound this morning while Kansas City remains slightly lower. Yesterday’s break was attributed to higher production estimates in Russia and India and weak seasonals this time of the season. Heat in western Europe will last at least through the weekend, increasing stress on heading wheat but the forecast indicates some relief is possible next week. Too much rain across the Gulf Coast and Tennessee Valley has a chance to lower SRW crop quality. However, seasonal headwinds are strong this time of year with approaching HRW harvest and US exports remaining uncompetitive. Russia’s fertilizer production in April was down 2.1% after Ukraine drone strikes shut down some production. SovEcon estimates Russian HRS production down 1.9% this season to 10.5 million tonnes, due to the very slow planting pace in the north. Argentina and Brazil wheat areas will be dry over the next week to 10 days. Weekly export sales will be delayed until tomorrow morning.
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