Sharply Higher Wheat Prices Fueling Ags

MORNING AG OUTLOOK

Sharply higher wheat prices have fueled strength across much of the Ag space in overnight trade.  Higher crude oil prices are also lending support as the US/Iran war remains at a standoff.  The Straits of Hormuz remains closed with no peace talks scheduled as Pres. Trump maintains negotiations could happen over the phone.  June-26 WTI crude oil hit a 7-week high currently up $5 just over $101 per barrel.  Spot RBOB is up $.07 per gallon while HO is up $.02.  Widespread rain fell across the US Midwest in the past 24 hours with heaviest amounts stretching from N. MO across S. IL and IN.  Isolated flooding is likely while some replanting may be necessary.  So far limited precipitation across the SW plains.  Heavy rain is forecast from C. TX across the Gulf Coast region thru the end of the week.  Week 2 of the outlook shows cooler than normal temperatures with below normal precipitation across much of the nation’s midsection.  Dry conditions in Argentina are favorable for crop maturation and harvest activities.  Rains in S. Brazil this week while central and N. growing areas remain hot/dry stressing the 2^nd corn crop.  The US $$ index is sharply higher, however holding within yesterday’s range.  US stock indices are sharply mixed ranging from up .15% in the DJIA to down 1.20% for the Nasdaq.

Corn: 

July-26 and Dec-26 are both up $.04 ½ at $4.73 ¾ and $4.94 respectively.  Both trading into new highs for the month.  July-26 remains rangebound between $4.50-$4.80.  Plantings advanced 14% to 25% complete vs. 22% YA and 5-year Ave. of 19%.  Plantings were more advanced than anticipated and the highest since 2020.  The Northern Midwest is the only region that lagged their historical average with MI and WI at 3% vs. 4% Ave., while zero planting reported so far in ND vs. at average of 3%.  Emergence has reached 7% vs. 5% YA and 5-year Ave. of 4%.  Large speculative traders reportedly bought 13k contracts yesterday stretching their long position back out to 195k contracts.  O.I. however fell 19k contracts driven by liquidation of the May-26 contract which was down just over 54k contracts.

Soybeans:

July-26 beans are down $.01 at $11.91 while Nov-26 is up $.01 at $11.67.  July-26 meal is up another $1.50 at $329.30 while oil is steady at 71.67.  July-26 beans held a test of its 50-day MA support at $11.84 while holding within yesterday’s range.  Seemingly never-ending strength in US crush margins, up another $.04 overnight at a new all-time high at $3.57 bu.  The EU rejection of a couple of cargoes of Argentine soybean meal into the Netherlands has supported US meal basis levels and driving crush margins into the stratosphere.  Plantings are at a record pace at 23%, above the 17% pace from YA and 5-year Ave. of 12%.  The final leg of plantings in the Delta will be slowed by rain this week.  MS is at 66% vs. 41% Ave., LA at 77% vs. 45% Ave. and AR at 61% vs. 35% Ave.  Nationally, 8% of the crop has emerged vs. only 2% YA and 5-year Ave. of 1%.

Wheat: 

Prices range from $.10 higher in MIAX to $.19 higher in KC as markets continue to inject weather and war/energy premium.  CGO July-26 is up $.13 ½ at $6.43 ¼ with next resistance at the March high just below $6.50.  KC July-26 is $.18 ½ at $6.93 ¾ while reaching a 23-month high.  MIAX July-26 is up $.10 at $7.04 ½ while stretching out to a new contract high.  Saudi Arabia’s 985k mt purchase of wheat for June-Aug shipment was well above the tender volume of 710k.  Prices ranged from $273-$285/mt CF with shipment to ports along the Red Sea to avoid transport thru the Straits of Hormuz.  WW ratings held steady at 30% G/E, however there was a 2% shift from fair to Poor/VP.  Overall ratings remain well below their historical average.  Ratings in KS fell another 1% to only 23% G/E while poor/VP held at 41%.  Look for a higher-than-normal level of abandonment in KS this year.  Ratings fell 6% in CO and OR while dropping 4% in NC and SD.  Conditions surged 14% in AR.  Nationally 34% of the crop is headed, vs. 25% YA and 5-year Ave. of 21%.  Spring wheat plantings advanced only 7% to 19% complete, vs. 28% YA and the 5-year Ave. of 22%.

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