Written Commentary
MORNING AG OUTLOOK
Soybean oil continues its upward trajectory carving out new contract highs for a 5th consecutive session while looking for a 9th consecutive higher close. The rest of the Ag space is lower. Energy prices are also moderately lower in 2-sided trade as markets monitor developments in the Middle East. The fragile US/Iran ceasefire has been put to the test in recent days. Iran reportedly launched drone and missile attacks against the UAE yesterday, while US forces sunk several Iranian vessels attempting to interfere with commercial shipping through the Straits of Hormuz. June-26 WTI crude oil is down $2.50 a barrel near $103.90, spot RBOB is down $.05 per gallon while HO is off $.02. Lite to moderate precipitation pulled east from CO across the central Midwest in the past 24 hours. Heaviest rain was in central IL and IN. Rainfall through the end of this week to favor the Delta and S. Midwest along with the ECB. Mixed precipitation for E. CO and far W. NE and Kansas will bring some relief from severe drought. Scattered rains return to EC and S. Argentina. Significant harvest delays aren’t expected. Scattered rains for Southern and far western Brazil over the next week, while hot/dry across much of the central and northern growing areas creating moderate stress for the developing 2nd corn crop. The US $$$ is slightly higher with equity markets are moderately higher.
Corn:
July-26 is down $.02 ½ at $4.83 ¼ while Dec-26 is down $.02 at $5.02 ½. July-26 matched its March high at $4.87 ½ before turning lower. Dec-26 jumped out to a fresh 2 ½ year high before backing up. Plantings advanced 13% to 38%, in line with expectations while matching the YA pace and just ahead of the 5-year Ave. of 34%. The Northern Midwest remains the only region lagging their historical average with MI at 5% vs. 14% Ave., WI at 10% vs. 15% Ave., ND at 4% vs. 9% and IA at 42% vs. 44% Ave. Emergence at 13% is above the YA pace of 10% and the 5-year Ave. of 9%. Huge speculative buying yesterday likely taking the MM long position up to nearly 300k contracts. O.I. surged 37k contracts.
Soybeans:
July-26 beans are down $.03 at $12.19 ¾ while Nov-26 is $.02 lower at $11.94 ¾. July-26 meal is down $1.00 at $319.90 while oil is up 15 points at 76.68. Inside trade for both July-26 and Nov-26 beans. Resistance for July-26 is at the March high just above $12.50. Nov-26 poked its head above $12 yesterday before closing just below it. July-26 meal is consolidating near its 50-day MA while new contracts high for July-26 oil. Next resistance for spot oil is the Nov-22 high at 78.64. Spot board crush margins pulled back another $.05 yesterday to $3.56 bu. while bean oil PV reached a new all-time high at 54.9%. With D4 RINS valued at just over $2, S&P Global calculates RD breakeven price for soybean oil is just below $.90 lb. The MM record long position in bean oil is approaching 190k contracts. Plantings remain at a record pace at 33%, above the 28% pace from YA and 5-year Ave. of 23%. Plantings in the Delta are hitting the home stretch with MS at 77% vs. 57% Ave., LA at 84% vs. 58% Ave. and AR at 73% vs. 47% Ave. MI is the most noticeable delay at 3% vs. 15% Ave. 13% of the crop has emerged vs. only 6% YA and 5-year Ave. of 5%. In advance of the Trump/Xi summit in Beijing in just over a week, Treasury Sec. Bessent urged China to persuade Iran to open up the Strait of Hormuz.
Wheat:
Prices range from $.05 – $.09 lower, unable to hold early strength overnight. CGO July-26 is down $.05 ½ at $6.35 ½, KC July-26 is $.08 ½ lower at $6.86 while MIAX July-26 is down $.06 at $6.93. Winter wheat ratings increased 1% to 31% G/E, however there was a 2% increase in Poor/VP to 37%. Overall ratings remain below their historical average and the lowest in 3 years. Ratings in KS fell another 1% to only 22% G/E while poor/VP held rose 3% to 44%. I’d expect a higher-than-normal level of abandonment in KS this year. Ratings fell 8% in WA and 6% in NE. Conditions jumped 8% in IL and MO. Nationally 49% of the crop is headed, vs. 37% YA and 5-year Ave. of 32%. In KS 70% of the crop was headed. Current conditions suggest WW production at 1.187 bil. bu. with an average yield of 49.6 bpa.
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