Volatile Wheat Trade Overnight

MORNING AG OUTLOOK

Volatile wheat trade overnight as prices are slightly higher across the Ag space ahead of this AM’s weekly export sales.  Nearby CGO wheat futures stopped just shy of their May highs before backing as supply uncertainty from Ukraine/Russia continue to fuel speculative short covering.  Two of the three Ukrainian ports along the Black Sea are operating as normal for now.  The port of Chornomorsk has sharply reduced its grain intake due to continuous Russian strikes over the past few weeks. As missile strikes on Ukraine/Russian ports, grain infrastructure and ocean vessels mount, Black Sea cash grain offers are becoming scarce with freight insurance unavailable or extremely expensive.  Global importers are shifting to the EU, Australia or SA.  Russia is the largest exporter of wheat, while Ukraine is the 4^th largest exporter of corn and the 7^th largest exporter of wheat.  This week’s temperature surge across the N. Plains and central Midwest is expected to last through this weekend, however is well discounted in today’s market.  Next week forecasts below normal temperatures across the NC Midwest and much of the ECB with normal rainfall.  Above normal temperatures continue to linger across much of the WCB with below normal precipitation.  Scattered rains across France with some localized heavy amount reported in the past 24 hours before returning to a hot/dry pattern.  Seasonably warm in SA with rains limited to S. Brazil and EC Argentina.  Heavy rain in RGDS may delay 2^nd corn harvest.  Energy prices are little changed with Spot WTI crude oil down $.15 per barrel while spot RBOB and HO are up $.03 per gallon.  The US $$ is slightly higher while US stock indices are mixed.

Corn: 

Sept-26 and Dec-26 are both $.02 higher at $4.49 ½ and $4.71 ½ respectively.  Both stretched out to fresh 6-week highs.  Ethanol production slumped to 306 mil. gallons, down from 321 mil. the previous week and down 4% YOY.  Production was the lowest in 10 weeks and below the pace needed to meet the USDA usage forecast for a 13^th consecutive week.  US exports should continue to hold up well as Brazil uses more of their crop domestically.  US remains competitively priced in the global marketplace. Export sales are expected to range from 35-80 mil. bu. for both crop years combined.

Soybeans: 

Aug-26 beans are up $.03 ¼ at $12.05 ½ while Nov-26 is $.02 ½ higher at $12.04 ¼.  Both held below this week’s high.  Aug-26 meal is up $3.00 at $321.80 while Aug-26 oil has turned 5 lower at 72.87.  up 13 points at 72.53 while holding within yesterday’s range.  Crush margins firmed up a few cents to $3.04 ½ bu.  Markets remain sensitive to China demand interest, or lack thereof.  US Gulf FOB offers hold $.05-$.20 over Brazilian offers thru Nov. despite no flash sale announcements the past few days.  Yesterday NOPA reported their members crushed 214.3 mil. bu. of beans in June-26, roughly 10 mil. above expectations and above the range of estimates.  This compares to 209 mil. bu. in May-26 and only 185 mil. in June-25.  Implied census crush at 220 mil. bu. places YTD usage at 2.216 bil bu up 8.5% from YA, in line with the current USDA forecast.  Despite the higher crush and higher bean oil production, oil stocks fell to an 8-month low at 1.5 bil lbs. down 13.5% from May.  Stocks were also below the range of estimates, suggesting a surge in domestic usage.  Export sales are expected to range from 36-80 mil. bu. of beans, 150-600k tons of meal, and -5-10k tons of oil.

Wheat:

Prices range from $.01-$.06 higher with all 3 classes stretching out to their highest levels in nearly 2 months.  CGO Sept-26 is up $.06 at $6.83 ½ after peaking just below the May high of $7.00.  KC Sept-26 is $.01 ¼ higher at $7.21 ¼ while MIAX Sept is $.01 higher at $6.84 ¼.  Open interest from yesterday’s trade was up 8k in CGO and 6.5k in KC, suggesting not just speculative short covering driving prices.  Likely a combination of fresh speculative longs or end users locking in prices.  A German farm co-op forecasts their 2026 wheat production will fall 5.6% from YA to 42.7 mmt, a day after France’s Farm Ministry projected production down 4% YOY.  Supply disruptions from the world’s largest exporter of wheat coupled with lower production in the US and EU will likely keep the path of least resistance higher with volatility elevated.  Export sales are likely to range from 9-22 mil. bu.

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