Mixed Trade Across The Ag Space

MORNING AG OUTLOOK

Mixed trade across the Ag space this AM with most contracts experiencing 2-sided trade.  Friday’s CFTC-COT data showed mixed trade by speculative traders in the week ended Tues. Sept. 8^th.  They did however confirm record long positions by money managers in soybeans and soybean meal.  I viewed Friday’s USDA data as neutral for corn, while neutral bearish for soybeans and wheat.  Energy prices rebounded from Friday’s pullback after Saudi Arabia shuttered a key pipeline that bypasses the Straits of Hormuz.  Spot WTI crude oil is up $3.00 per barrel at $103.05 while RBOB is up $.13 per gallon with HO $.10 higher.  Weekend rains favored the ECB and SE with the next system pushing across the WCB this morning.  100+ degree heat was limited to the S. Plains and Delta region while mid-90’s were common in the WCB and S. Midwest.  Heavy rains are expected this week across the N. Midwest and Great Lakes regions while hot and dry in the South.  Week 2 of the outlook does provide better chances for rain in the S. Plains.  In Brazil heavy rains in MGDS with moderate showers across the Mid-south into N. RGDS.  In Argentina moderate rains in the west while mostly dry in the east.  Cooler than normal temperatures this week in Brazil with scattered rains favoring the South.  Above normal temperatures in Argentina with scattered moisture.  Much of Europe remains in an above normal temperature pattern.  The US $$ is sharply higher, stretching out to a 2-week high.  Odds for a Fed rate hike this week are up to 86%.  US stock indices range from slightly to sharply lower as safety concerns over rapidly advancing AI continue to mount.

Corn: 

Dec-26 futures are down $.01 ¼ at $5.29 while holding within Friday’s range.  Prices did manage to recover after trading below $5.25 intraday on Friday.  The USDA production and stocks were both slightly above the Ave. trade guess, however well within the range of estimates.  I felt the biggest surprise in Friday’s data was the USDA raising EU production .4 mmt to 50.6 mmt.  I expect US crop ratings to slip another 1% to 55% G/E.  I look for harvest to have advanced to 9% vs. the 5-year Ave. and YA at 7%.  APK-Inform raised Ukraine’s production forecast 2.5 mmt to 32.3 mmt while lowering their export forecast 2 mmt to 22 mmt.

Soybeans: 

Nov-26 beans are up $.02 ½ at $12.99, Oct-26 meal is steady at $346.80 while Oct-26 oil is up 38 points at 69.57.  Crush margins are little changed at $2.46 ½ bu.  US production at 4.535 bil. bu. was roughly 35 mil. above the Ave. estimate while stocks at 310 mil. were 10 mil. above the Ave. trade guess.  The USDA has lowered soybean yields in Aug. only to raise them in Sept. 7 times since 1990.  In 5 of those years final yields were above the Sept. forecast while below the Sept. estimate only twice.  The lack of bullish news from the USDA turned speculative traders sellers on Friday having uploaded 23k contracts of soybeans, 11k oil and just over 2k meal.  The combined MM long position across the soybean complex as of last Tues. at 527k contracts was a new record high.  Confirmed Chinese purchases of US soybeans are at 8.983 mmt with another 5.78 mmt to unknown.  With additional flash sales announced last week, total to China likely sit just over 13 mmt.  I look for crop ratings to slip 1% to 57% G/E with harvest in the single digits.  APK-Inform raised Ukraine’s sunflower seed harvest by .1 mmt to 13.58 mmt while lowering their soybean harvest 9% to 5.22 mmt.

Wheat: 

Prices range from $.01 lower to $.05 higher in 2-sided trade overnight.  CGO Dec-26 is $.04 ½ higher at $7.30, KC Dec-26 is down $.01 at $7.97 ½ while Dec-26 MIAX is $.02 ½ higher at $7.47 ½.  Higher than expected global stocks on Friday tilted the USDA data bearish.  Continued logistical disruptions from the Black Sea region continue to provide underlying support.  USDA to provide US production updates on Sept 30^th.  APK-Inform raised Ukraine’s production forecast 2.4 mmt to 25 mmt while lowering their export forecast 2 mmt to 10.5 mmt.  This compares to updated USDA est. of 26 mmt in production and exports at 12.50 mmt.  Seaborne grain exports from Russia in July/Aug period at only 4.2 mmt roughly half of the 8 mmt shipped YA.

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