Written Commentary
Surging Energies Stimulated Strong Recovery in Beans
- Mark Soderberg
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MORNING AG OUTLOOK
Surging energy prices have stimulated a strong recovery in soybean overnight while the rest of the Ag space is mixed. President Trump declared the ceasefire with Iran is “over” after a series of military strikes against Iran. This in response to Iranian strikes against vessels traveling throught the Straits of Hormuz. In addition the US Treasury Dept. revoked Iran’s licensed to sell oil around the world. Spot WTI crude oil is up $3.85 per barrel near $74.25 stretching out to a 2 ½ week high. Spot RBOB is up $.05 a gallon while HO is $.12 higher. Markets still seek confirmation of Chinese purchases from earlier this week while US weather continues to provide underlying support. Rains the past 24 hours remain heaviest across the N. Midwest with scattered precipitation in the S. Midwest, Gulf coast region and SE. Rainfall over the next 7 days to favor the central Midwest and ECB with little coverage for the WCB. Little to no precipitation for the Northern and Southern plains. By late this weekend a high pressure ridge is expected to expand across the US plains triggering much above normal temperatures. World Weather believes this ridge will gradually move west enabling cooler temperatures and rain, particularly for the eastern Midwest by the 2nd half of July. Continued hot/dry for much of Europe this week. Above normal temperatures in SA with rains limited to the interior south of Brazil. The US $$ is moderately higher in 2-sided trade while US stock indices are sharply lower.
Corn:
Sept-26 is down $.01 at $4.42 ¾ while Dec-26 is steady at $.464 ¼. Sept-26 closed higher for 5 consecutive sessions. Dec-26 is approaching a 50% Fibonacci retracement at $4.66 with 50 and 100-day MA resistance between $4.68 ½ at $4.73. A Reuters survey shows traders expect lower corn stocks for both old and new crop in Friday’s USDA WASDE update. Little change expected for this years production. Today’s EIA data is expected to show ethanol production slip to 324 mil. gallons down from 329 mil. the previous week.
Soybeans:
Aug-26 beans are up $.08 at $12.01 ¾ while Nov-26 is $.03 ¼ higher at $12.01. Aug-26 stretched out to a 6-week high. Resistance for Nov-26 is at its May high of $12.14. Aug-26 meal is down $3 at $313.20 while holding within yesterday’s range. Aug-26 oil is up 133 points at 69.92 trading to a 3-week high. Crush margins (Aug-26) rebounded $.04 to $2.58 ½. US FOB offers at the Gulf range from $.10-$.20 over Brazilian offers out the Nov-26. The Reuters poll shows traders expect very little change to old crop soybean stocks while new crop is expected to jump 20 mil. bu. to 330 mil. due to higher acres. For now the path of least resistance is higher with US weather uncertainties and Chinese demand potential.
Wheat:
Prices range from $.02-$.06 higher across the 3 classes. CGO Sept-26 is up $.03 ½ at $6.22 trading to a 5-week high. KC Sept-26 is $.06 higher at $6.58 ¾ stalling just below resistance at $6.64 ½. MIAX Sept is also up $.06 at $6.39. The Reuters survey shows traders expect US 26/27 wheat stocks to slip 30 mil. bu. to 714 mil. All wheat production is expected to fall 18 mil. to 1.525 bil due to lower winter wheat. The Ave. WW production forecast at 1.001 bil is down 29 mil. from June. Final Russian exports in 25/26 at 48 mmt were well above the 42.2 mmt shipped in 24/25.
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