Ag Markets Await Updates from Trump/Xi Summit

MORNING AG OUTLOOK

Mostly lower trade across the Ag space overnight as markets await updates from the Trump/Xi summit in Beijing.  Much of their talks seemed to focus in reopening the Straits of Hormuz with China also insisting the US scale back its military and financial support of Taiwan.  The WSJ reports a White House official said “Trump had a good meeting with Pres. Xi of China” adding the 2 leaders discussed “ways to enhance economic cooperation.”  They reportedly also discussed increasing Chinese Ag. purchases while also making efforts to limit the flow of fentanyl from China to the US.  Energy prices are little changed as the standoff between the US and Iran continues. WTI June-26 crude oil is down $.20 barrel near $100.80 in 2-sided trade.  Spot RBOB is down $.03 per gallon while HO is $.02 lower.  Outside of spotty, light rain in far ECB it was dry across the nation’s midsection the past 24 hours.  Weather leans bearish for the Ag. space with moderate to heavy rainfall across the midwest over the next week with lighter totals in the SW plains and SE.  Week 2 of the outlook continues with above normal temperatures and precipitation.  Cool/dry conditions for Argentina for the next week, favorable for harvest activities.  In Brazil rains to favor the interior south with lighter amounts in WC Mato Grosso.  Hot and dry for the central and EC regions.  The US $$ is little changed in 2-sided trade.  US stock indices are higher coming off fresh record closes for the Nasdaq and S&P 500.

Corn: 

July-26 is down $.03 at $4.77 ¾ while Dec-26 is $.03 ½ lower at $4.99 ½.  Resistance for July-26 is at this month’s high of $4.87 ½ with support at its 50-day MA at $4.68 ½.  Yesterday’s ethanol production came in above expectations at 318 mil. gallons however was below the pace needed to reach the USDA corn usage forecast of 5.60 bil bu.  The US House passed legislation yesterday to allow the year-round sale of E-15.  The measure passed 218-203 where it now moves on to the Senate where it will need a 60% vote to pass.  Export sales are expected to range from 40-75 mil. bu.  The Rosario Grain Exchange raised their Argentine production forecast another 1 mmt to 68 mmt.  This compares to the USDA’s revised forecast of 59 mmt.  Awaiting updated production forecasts for Brazil from Conab.

Soybeans: 

July-26 beans are $.13 lower at $12.16 while Nov-26 is down $.07 ¼ at $12.00 ½.  July-26 meal is down $3 at $335.50 while July-26 oil is down 25 points at 74.07.  Lack of immediate bullish demand news from the Trump/Xi summit has caused speculators to lighten up on their record length in the soybean complex.  Crush margins improved another $.05 overnight to $3.37 bu.  Despite crush margins recently surging to new record highs, NOPA data on Friday is expected to show members processed 214 mil. bu. in April-26, down from 226 mil. in March, however up from 190 mil. in April-25.  Oil stocks are expected to have fallen 4% to 1.95 bil lbs.  The RGE raised their Argentine soybean production forecast 2 mmt to 50 mmt, vs. the USDA est. of 48 mmt.  Export sales are expected to range from 5-20 mil bu of soybeans, 150-500k tons of meal and -2-12k tons of oil.

Wheat: 

Prices range from $.06 lower to $.03 higher.  CGO July-26 is up $.01 at $6.76 ½, KC July-26 is down $.06 at $7.19, while MIAX July-26 is up $.03 at $7.23.  Day 2 of the Kansas wheat tour estimated average yields of 39.3 bpa vs. 53.5 bpa YA.  Yields in E. Kansas will undoubtedly show better promise than in the west.  The USDA pegged the average yield in Kansas this year at 37 bpa down from 51 bpa last year.  The RGE is forecasting Argentine production in 26/27 will range from 18-19 mmt, well below the 29.5 mmt in 25/26.  The USDA is forecasting 25/26 production at 27.9 mmt and 21 mmt in 26/27.  US exports should quickly tail off with prices uncompetitive in the global marketplace.  Export sales are expected to range from 6-18 mil bu.

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