Prices Surged Across The Ags Overnight

MORNING AG OUTLOOK

Prices surged across the Ag space overnight driven by new highs in energy markets and news that US/China trade negotiators will meet in Mid-March in Paris clearing the way for Pres. Trump and Chinese leader Xi to meet in Beijing late this month.  Speculators sold the Sunday night rally on fears the Trump/Xi meeting may be cancelled due to US/Israeli military operations in Iran.  News that the Straits of Hormuz has been closed fueled the surge in energy prices.  Spot crude is up $4.35 per barrel near $75.60, holding below last summer’s high at $78.40.  Dry conditions across nearly all of Brazilian Ag. areas the past 24 hours, favorable for soybean harvest and 2^nd corn plantings.  Rains this week will favor the north, slowing the remaining bean harvest.  Better than expected rains fell in SW growing areas of Argentina the past 24 hours, improving crop prospects.  Rains over the next 7 days to favor the western and northern growing areas.  Waves of precipitation are expected to move across the US midsection this week.  Heaviest totals across the SE plains along with the central and ECB, helping ease drought concerns ahead of spring plantings.  Mostly dry in the SE.  More scattered rains for the SW and northern plains.  Above normal temperatures will cover much of the nation’s midsection by mid to late week.  The US $$ surged to a fresh 6 week high.  US stock indices are showing losses of 1.25%-1.75%.

Corn: 

May-26 is up $.05 ¼ at $4.51 holding withing yesterday’s range.  New crop Dec-26 traded to a 9 month high.  After heavy selling yesterday speculators are pretty much flat in the corn market.   Corn used for the production of ethanol in Jan-26 at only 461 mil. bu. was well below expectations of 483 mil.  In addition usage in Dec-25 was revised lower by nearly 6 mil. bu. to 483.  This data would suggest sorghum usage as a feedstock continues to grow.  In the first 5 months of the 25/26 total corn usage has reached 2.318 bil. bu. down .5% from YA vs. the USDA forecast of up 3%.  The USDA corn usage est. is starting to look too high.

Soybeans: 

May-26 beans are up $.13 ½ at $11.77 ½ holding within yesterday’s range.  May-26 meal is up $2.90 at $315.80 while oil up 54 points at 63.28.  Nov-26 traded to its highest level since May-24.  Census crush in Jan-26 at 227.8 mil. bu. was slightly above expectations.  YTD crush at 1.119 bil. bu. is up 7.4% from YA vs. the USDA forecast of up 5.1%.  Crush Feb-26 thru Aug-26 will need to reach 1.451 bil. bu. vs. 1.402 bil. YA.  Bean oil stocks rose 11.7% to 2.433 bil. lbs., slightly above expectations and the highest since April-23.  With the recent surge in crush margins I’d expect the USDA to raise their forecast 10-20 mil. bu. in next week’s WASDE.  Spot FOB offers at the US Gulf are now $1.30 bu. above Brazil.  While that difference slips to only $.85 bu. by June its still difficult to envision additional Chinese purchases under those pricing dynamics.  Production est. in Brazil have trended lower with too wet of conditions in the north while dry in the south.  Recent forecasts have come in just below the USDA’s 180 mmt.

Wheat: 

Prices range from $.02 higher in MIAX to $.07 higher in KC.  CGO May-26 is up $.04 at $5.81 ¼.  KC May-26 is up $.06 ½ at $5.81 ¼.  Still no deliveries across the 3 classes.  Australia’s Dept. of Agricultural raised their 25/26 wheat production forecast to 36 mmt, while the 3^rd highest ever its still below the USDA forecast of 37 mmt.  The Russian port at Novorossiysk while not officially closed remains significantly disrupted due to Ukrainian drone attacks this past weekend.

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