Lower/Sharply Lower Trade Across The Ag Space

MORNING AG OUTLOOK

Lower to sharply lower trade across the Ag space overnight driven by a sharp drop in energy prices.  Energy prices collapsed as the Trump Admin. paused plans to escalate the war with Iran in hopes diplomatic measures can achieve a peace solution while reopening the Straits of Hormuz.  China’s pushback on the Trump Admin. latest tariff plan has also weighed on soybeans.  Spot WTI Sept-26 crude oil is down $5.25 per barrel near $84 nearing its 100-day MA support at $81.15.  Spot RBOB is down $.11 per gallon while HO is off $.05.  As expected 100+ degree heat blanketed much of the plains and WCB this weekend with temperatures topping out over 110 in W. SD.  There were isolated showers in E. KS and E. SD with better coverage in the SC and SE Midwest.  While their was little to no precipitation for Iowa and the Great Lakes region, forecasts this week for general coverage of .75”-1.25” would keep yields prospects high.  Much lighter coverage for the WCB and Northern plains with little to no precipitation for the SW plains.  Above normal temperatures with limited prospects for rain hold throughout the first week of August where crop stress will remain elevated.  Much of Europe will be hot and dry this week.  Dry in WC Brazil while scattered showers expected in EC Argentina.  Moderate to heavy rains in S. Brazil.  The US $$ is moderately lower while US stock indices are higher.

Corn:

Sept-26 and Dec-26 are both $.13 lower at $4.51 ½ and $4.74 ½ respectively.  Both violated support at their 100-day MA’s however held above LW’s low.  Cattle on feed as of July 1^st at 11.37 mil. head was up 2.2% from YA and in line with trade expectations.  Placements  were down nearly 3% vs. expectations of down 1.2% while marketing were down 2.7%.  The USDA will start a phased reopening of the US border to cattle imports beginning Aug. 24^th.  Money managers bought nearly 50k contracts of corn extending their long position to 93K as of last Tues. July 21^st.

Soybeans: 

Aug-26 beans are down $.32 to $12.16 while Nov-26 is $.34 lower at $12.19 ½.  So far both are holding above the chart gaps created a week ago.  Aug-26 needs to trade to $12.05 ¼ to fill its gap while Nov-26 needs to reach $12.04.  Aug-26 meal is down $7.30 at $324 while Aug-26 oil is down 177 points at 72.56.  Oil is nearing support at its 50-day MA at 72.24.  Crush margins are steady at $2.98 ½ bu.  MM’s were net buyers across the Ag. space for a 3^rd consecutive week as they were net buyers of 164k contracts, the most in 4 months, while extending their long position to 547k contracts.  The MM long position across the soybean complex swelled to just over 325k contracts as of last Tuesday, still a fair amount below the record on 502k in May-26.  The market has little wiggle room for US yields slipping below the current 53 bpa trendline forecast.  We’ll see if China uses this price break to acquire additional US soybeans.

Wheat: 

Prices range from $.09 to $.11 lower.  CGO Sept-26 is down $.10 ½ at $6.67 ½, KC Sept-26 is $.10 ¾ lower at $7.34 ½ while MIAX Sept-26 is $.10 ½ lower at $7.03 ¾.  CGO and KC have both held within Friday’s range.  Russia and Ukraine continue to target each other’s grain storage, port infrastructure and vessels.  The disruption of agricultural goods from the Black Sea region continues.  The combined MM position in the 3 classes of wheat has swung around to net long for the first time in 2 months, however still short 19k in CGO.

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