Favorable Weather Cont to Weigh on Commodity Valuations

MORNING AG OUTLOOK

Mostly lower trade across the Ag space this AM as lower energy prices and favorable weather continue to weigh on commodity valuations.  Iran’s state media is reporting that the US and Iran are close to agreeing to a peace proposal that would reopen the Straits of Hormuz in exchange for the US lifting oil sanctions.  Wire services are reporting that the memorandum of understanding could be signed as early as Sunday in Switzerland.  Spot WTI crude oil fell to a 2 month low down $3.40 per barrel near $84.30  Spot RBOB is down $.11 per gallon while HO is $.18 lower.  Powerful storms continue to pound areas of the central and N. Midwest.  Heaviest precipitation in the past 24 hours was in S. Iowa stretching east into the Great Lakes region.  The NC Midwest will get break from the heavy rain with cooler temperatures into the middle of next week.  Rains will favor the central midwest and Gulf coast region.   Moderate to heavy rains across central and Southern Brazil will benefit late 2^nd corn however slow early harvest progress.  Dry conditions in Argentina will benefit corn harvest.  The US $$ is slightly lower while holding within yesterday’s range.  US stock indices are higher.

Corn: 

July-26 is $.03 lower at $4.08 ¾ while Dec-26 is off $.03 ¾ at $4.35 ¾ with both establishing new contract lows.  Support for July-26 is near $4.05, the January low on the weekly chart.  Yesterday’s USDA data was viewed as neutral to bearish with the increased global stocks.  Production in SA was increased 5 mmt with Argentina up 2 mmt to 61 mmt, while Brazil was up 3 mmt to 138 mmt.  The biggest increase however was in India +9 mmt to 55 mmt, which will likely not impact global trade.  The BAGE held their Argentine production forecast unchanged at 64 mmt while reporting harvest has reached 44%, well below the 55% reported by the Rosario Grain Exchange.

Soybeans: 

July-26 beans are $.02 ½ lower at $11.12 ½ while Nov-26 beans are $.03 ¼ lower at $11.30 ¾.  July-26 meal is up $1.60 at $303.30 while July-26 oil is down $.01 at $.7345 lb.  With the exception of bean oil, prices across the complex have held within yesterday’s range.  Crush margins slipped another $.05 to $3.62 ½ bu.  While US stocks held steady at 340 mil. bu. as expected, the USDA raised crush another 20 mil. which was offset by lower exports.  Yesterday’s weakness was driven by speculative selling as weather remains mostly favorable while prices seek a level that stimulates Chinese interest.  US FOB offers at the Gulf are steady with Brazil by Sept-26, while at a slight discount by Oct-26.  The BAGE held their Argentine production forecast steady at 50.1 mmt while reporting harvest reached 95%.  Yesterday the USDA raised their Argentine forecast 2 mmt to 50 mmt.

Wheat: 

Prices range from $.01 – $.03 lower across the 3 classes.  CGO July-26 is down $.02 ¼ at $5.84 ½, KC July-26 is $.02 lower at $6.32 ¾ while MIAX July-26 is off $.02 ½ at $6.17.  Yesterday’s USDA data was neutral to supportive as winter wheat production was cut for the first time in the June report since 2014.  Production at 1.030 bil. is the lowest in over 50 years.  The Ave. yield at 46.8 bpa is the lowest in a decade.  No changes to the harvested acres in yesterday’s report.  The BAGE reports Argentine plantings advanced 12% in the past week to 44%.

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