Ag Prices Surged After Supportive USDA Data

MORNING AG OUTLOOK

Mixed trade across the Ag space following yesterday’s price surge after supportive USDA data along with ongoing supply disruptions from the Black Sea region triggered huge speculative buying.  At least 2 major grain terminals in Russia’s port of Novorossiysk were left inoperable following Ukrainian drone strikes earlier this week.  Russia’s Ag. Minister maintains they are looking to establish alternative routes for their agricultural exports.  Russia responded by attacking Ukrainian military and port infrastructure at the Danube ports of Reni and Izmail overnight.  No end in sight for the war that has now stretched into its 5^th year.  Energy prices are lower despite talks to reopen the Straits of Hormuz appear to have stalled.  Spot WTI crude is down $1.75 a barrel near $81.50.  Spot RBOB is $.01 lower while HO is down $.05 a gallon.  Powerful storms and heavy rain continue to ride up and around the high pressure ridge anchored in the S. Plains.  This pattern looks to extend into early next week.  Hot and dry condition in the SW corn belt, S. plains and Delta region will continue to advance crops toward maturity.  Seasonally cool across Argentina and S. Brazil over the next week with rains across N. Argentina and S. Brazil.  Warm and dry across C. and Northern growing regions of Brazil.  Europe to remain hot while improved prospects for rain, likely too late to provide benefit for France’s corn crop.  The US $$ is slightly lower in 2-sided trade ahead of today’s PPI release.  Yesterday’s CPI report was in line with expectations.  US equity markets lean a bit higher.

Corn: 

Sept-26 and Dec-26 are both $.04 lower at $4.53 and $4.76 ¾ respectively.  The 100-day MA for Dec-26 at $4.71 ¾ is now support, with resistance at the July high of $4.92.  Conab is expected to cut Brazilian production .6 mmt to 141.1 mmt which is still above the revised USDA est. of 140 mmt.  The Rosario Grain Exchange raised their Argentine production forecast 2.5 mmt to 70.5 mmt while reporting harvest has reached 75%, delayed due to a wet and warm July.  The USDA kept their forecast unchanged at 63 mmt.  Eport sales are expected to land between 25-70 mil. bu.  Despite massive speculative buying of over 55k contracts yesterday, O.I. was near unchanged.

Soybeans:

Sept-26 beans are $.02 higher at $11.67 ¼ while Nov-26 is $.01 higher at $11.84 ¼, both holding within yesterday’s range.  Sept-26 meal is up $1.30 at $309.80 while Sept-26 oil is steady at 69.16.  Crush margins are little changed at $2.75 ½ bu.  Conab is expected to raise their Brazilian production forecast .5 mmt to 181.1 mmt, just above the revised USDA forecast of 180.5 mmt.  The BAGE if forecasting Argentine production in 26/27 will reach 48 mmt, below the USDA est. of 50 mmt.  US Gulf FOB offers are running $.30-$.45 bu. below Brazilian offers stretching out to year end.  China continues to rack up purchases ahead of  Chinese leader Xi expected visit to Washington DC in 6 weeks.  Yesterday the USDA reported a flash sale of 244k mt of soybeans to China.  Export sales are expected to land between 30-80 mil. bu., both crop years combined for soybeans, 150-400k tons of meal and -2-10k tons of soybean oil.

Wheat: 

Prices range from $.03-$.05 higher.  CGO Sept-26 is up $.03 ¾ at $6.56 ½, KC Sept-26 is $.04 ¾ higher at $7.25 ½ while MIAX Sept-26 is up $.04 at $6.77.  The USDA took a very measured approach in lowering Ukraine/Russia exports only 2.5 mmt largely offset by Canada and Kazakhstan up 1 mmt each.  No change in US 26/27 exports despite being down 30% YTD vs. their current est. of down only 15%.  A German association of farm coop’s, DRV, lowered their 26/27 wheat production forecast by 1.5 mmt to 20.55 mmt given this summer’s heatwave and drought.  US export sales are expected to land between 8-18 mil. bu.

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