Most Ag Contracts Experiencing 2-Sided Trade

MORNING AG OUTLOOK

Mixed trade across the Ag space overnight with most contracts experiencing 2-sided trade.  To say this week saw heavy speculative selling would be an understatement while this afternoon’s CFTC-COT report will only capture trade activity thru Tuesday.  Favorable US weather and the lack of Chinese demand has driven the speculative selling and weaker price action.  Energy prices are little changed in 2-sided trade as the standoff in the Persian Gulf continues.  Yesterday Pres. Trump stated it would be an honor to meet Ayatollah Mojtaba Khamenei, Iran’s Supreme Leader, “if it was to make a deal.”  WTI July-26 crude oil is unchanged at $93.04, spot RBOB is up $.03 per gallon while HO is off $.01.  Moderate to heavy rains fell across portions of the WCB the past 24 hours with some isolated flooding where KS, NE and MO all meet.  Rains over the next week to favor the central midwest while much of the nation’s midsection is to see above normal temperature and precipitation into mid-June.  Rains for northern growing areas of Brazil over the next week to 10 days if verified will benefit their 2nd corn crop.  Rains in EC Argentina not likely to slow corn and soybean harvest for long.  The US $$ is moderately lower awaiting US employment data.  The US economy is expected to have added 80k jobs last month while the unemployment rate is expected to hold at 4.3%.  US stock indices are lower.

Corn:

July-26 and Dec-26 are both $.02 ½ lower at $4.22 and $4.49 ¼ respectively.  July-26 traded to a new contract low while Dec-26 has so far held above its January low at $4.45 ¼.  Export sales are 26% above YA while the USDA forecast is up 15.5%.  2025/26 stocks are likely to hold near last months 2.142 bil with higher exports offset by lower usage for ethanol production. The BAGE held their Argentine production forecast unchanged at 64 mmt vs. the USDA est. at 59 mmt.  Harvest advanced 6% to 41%.  The USDA remains confident the positive test of screwworm in Texas will not grow to widespread outbreak.

Soybeans: 

July-26 beans are $.02 ½ lower at $11.27 while Nov-26 beans are off $.01 at $11.40 ½ both holding within yesterday’s range.  July-26 meal is steady at $313.70 while July-26 oil is up 12 points at 76.41.  After collapsing $.17 yesterday board crush margins bounced $.03 ½ overnight to $4.03 ½ bu.  After raising crush 20 mil. last month and lowering exports 10 mil. I’m looking for no changes this month with stocks ending holding near 340 mil. bu.  Current export commitments are down 18% from YA in line with the current USDA est.  The market selloff has left US prices competitive against Brazil for Sept-26 forward.  The BAGE kept their Argentine production forecast unchanged at 50.1 mmt while harvest advanced 7% to 92%.

Wheat:

Prices are within $.02 ½ of unchanged across the 3 classes.  CGO July-26 is up $.02 ½ at $5.84, KC July-26 is down $.01 at $6.19 ¼ while MIAX July-26 is up $.01 at $6.22.  So far CGO July-26 has held support above its April low of $5.77 ¾.  Support for KC July-26 is at $5.98 ¾.  The price gap for US wheat and others offered in the global marketplace has narrowed in recent weeks.  Spring wheat acres in drought held steady at 23% while durum jumped 13% to 55%.  The BAGE reports Argentine wheat plantings advanced 18% to 32%, well above the 5-year Ave. of 20%.  Ukraine states that they struck 5 Russian vessels overnight in territorial waters that were transporting illegal grain trade and the transport of military cargo.

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