Surging Wheat Prices Provide Boost to Ags

MORNING AG OUTLOOK

Surging wheat prices has provided a boost across the Ag space in 2-sided trade overnight.  Early weakness a result of spillover selling from yesterday’s lower trade driven by an improved US weather outlook.  Black Sea logistics continue to drive wheat price discovery and market volatility.  Energy prices are lower despite the US military resuming attacks on Iranian targets. Renewed hostilities cast doubt on hopes for a peace agreement and the reopening of the Straits of Hormuz any time soon.  WTI Sept-26 crude oil is down $.90 a barrel at $83.55.  Spot RBOB is down $.05 per gallon while HO is off $.13.  The past 24 hours saw scattered rains in the WCB along with the Delta region.  Temperatures spiked over 100 degree’s F in both the N. and S. plains while low to mid 90’s for the rest of the WCB. Healthy rain is expected across key growing areas of the central Midwest by the end of this week keeping yields prospects elevated.  1”-2” amount are forecast for much of IA and IL along with surrounding states.  Temperatures to hold at near normal readings.  Above normal temperatures confined to the far WCB and plain states.  Week 2 of the outlook shows above normal temperatures across the continental US with normal precipitation in the ECB, below normal in the WCB.  Above normal temperatures across Europe with scattered rains in the east.  Above normal temperatures for SA with moderate to heavy rain in EC Argentina and S. Brazil.  The US $$$ is moderately lower after the Fed held interest rates steady.  US stock indices are higher.

Corn: 

Sept-26 and Dec-26 are both $.01 ½ higher at $4.50 ½ and $4.73 ¼ respectively.  Both slipped to a 2-week low before recovering.  Speculative selling yesterday cut the MM long position back down to 98k contracts.  O.I. however was up nearly 16k contracts.  Yesterday’s EIA data showed ethanol production rebounded to 330 mil. gallons, up from 322 mil. the previous week and up 2.5% YOY.  Production was above the pace needed to reach the USDA corn usage est. for the first time in 15 weeks. Export sales are expected to range from 25-60 mil. bu. for both MY’s combined.

Soybeans: 

Aug-26 beans are down $.00 ½ at $11.77 ½ while Nov-26 is steady at $11.92 ¾.  Both fell to 2-3 week lows before recovering.  Aug-26 meal is down $.60 at $314.70 while holding within yesterday’s range.  Aug-26 oil is up 17 points at 69.34.  Crush margins are steady at $2.77 bu.  Recent price weakness a result of improved US weather and lack of flash demand to China.  China’s Sinograin announced they will auction off 500k mt of soybeans on Friday to free up space for incoming US beans.  The market has little wiggle room for US yields slipping below the current 53 bpa trendline forecast if China fulfills 25 mmt of US beans purchases.  We’ll see if China uses this price break to acquire additional US soybeans.  US Gulf FOB offers are $.10-$.20 below Brazilian offers Sept thru Nov.  Export sales are expected to range from 25-65 mil. bu. for soybeans, 200-550k mt for meal and 0-10k tons of oil.

Wheat: 

Prices range from $.15-$.21 higher while all 3 classes are well off session highs.  CGO Sept-26 is up $.18 ½ at $6.79 ¼, KC Sept-26 is $.20 ½ higher at $7.46, while MIAX Sept-26 is up $.14 at $7.19.  Russia reportedly struck a dry-cargo vessel near the Ukrainian port of Pivdennyi and 2 more near Odesa.  Ukrainian drones struck a major Russian grain export terminal near the Kerch Strait causing “significant damage.”  No end in sight as both sides continue to target grain storage, infrastructure and vessels.  Rusagrotrans lowered Russia’s July export forecast to 1.9 mmt while expecting August shipments between 3-3.5 mmt.  Export sales are expected to range from 8-18 mil. bu.

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