Mixed Trade Across The Ag Space Overnight

MORNING AG OUTLOOK

Mixed trade across the Ag space overnight with the soybean complex higher while feed grains are mostly lower.  Energy prices are moderately higher as tensions in the Persian Gulf remain elevated.  The Trump Administration rejected Iran’s most recent peace proposal that was presented to Pakistani mediators on Friday.  There is unconfirmed reports Iran’s Navy fired on a US warship near Jack Island.  Yesterday, Pres. Trump stated the US military would assist in “freeing” cargo ships of nations not involved in the ME conflict that have been stranded by the closure of the Straits of Hormuz.  June-26 WTI crude oil is up $1.85 near $103.75.  June-26 RBOB is up $.03 per gallon while HO is $.04 higher.  New contract high for RBOB for a 6^th consecutive session.  Lite rains in the central and ECB over the weekend while heavy precipitations along the Gulf Coast.  Dry across the WCB and N. plains.  Rain this week will favor the S. Midwest and ECB.  Dry for much of the WCB and N. plains.  Some chances for mixed precipitation in W. NE and Kansas, however also risk of a damaging frost.  Dry conditions across much of Argentina have been favorable for crop maturation and harvest.  Weekend rains in S. Brazil were lighter than expected.  Scattered moisture is still expected across the South and WC regions this week.  Heat and dryness are causing moderate stress for developing 2^nd corn crop.  The US $$$ is moderately higher with equity markets slightly lower.

Corn: 

July-26 is steady at $4.80 ¼ while Dec-26 is $.00 ¾ higher at $4.99 ½.  Inside trade for July while Dec. jumped out to a fresh 2 ½ year high.  MM’s bought nearly 80k contracts of corn, pushing their long position to 264k contracts.  Indec funds bought 33,495 contracts stretching their long position to just over 400k for the 1^st time in 14 months.  Corn used for ethanol production in Mch-26 at 474 mil. bu. was up 10% from Feb-26 and up 4.8% YOY.  In the first 7 months of the 25/26 MY usage has reached 3.225 bil. up .6% from YA vs. USDA forecast of up 3%.  To reach the USDA forecast April thru Aug. usage will need to reach 475 mil. bu. month, up 6.24% from YA.  I look for the USDA to lower their usage forecast by 25-50 mil. bu.

Soybeans: 

July-26 beans are up $.07 at $12.10 ¼ while Nov-26 is $.05 higher at $11.88.  July-26 meal is up $1.00 at $320.30 while oil is up 25 points at 75.41.  July-26 beans jumped out to a 2-month higher while a new 2 ½ year high for Nov-26.  New contracts high for July-26 oil while inside trade for July-26 meal.  Spot board crush margins pulled back $.06 on Friday to $3.61 bu. while bean oil PV closed at a record high of 54.4%. Mch-26 crush at 227 mil. bu. was below expectations of 231 mil.  Cumulative crush over the 1^st 7 months of the MY at 1.561 bil. bu. is up 8.5% from YA, vs. the USDA forecast of up 6.8%.  To reach the current USDA forecast crush over the last 5 months of the MY needs to reach 210 mil.  I still expect the USDA to raise their crush forecast 10-20 mil. bu. in the May-26 WASDE.  Bean oil stocks slipped to 2.456 bil. roughly 100 mil. below expectations. MM’s bought only 281 contracts of soybean oil but it extended their record long position to nearly 166k.

Wheat: 

Prices range from $.02 – $.08 lower with 2-sided trade in CGO and KC.  CGO July-26 is down $.01 ¾ at $6.36, KC July-26 is $.07 ½ lower at $6.87, while MIAX July-26 is down $.08 at $6.96.  Across the 3 classes of wheat MM’s bought 30,643 contracts extending their combined long position to nearly 69k contracts, the largest since June-22.   Spring wheat plantings likely reached 30%, vs 42% YA and 5-year Ave. of 35%.

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