Favorable Weather, Spec Selling Drives Weaker Prices

MORNING AG OUTLOOK

I’m back in the saddle after traveling abroad for the last week and a half.

During that time Dec-26 corn and July-26 CGO wheat were down 6 of the 7 sessions, while Nov-26 beans were down 5 of 7.  Favorable US weather, speculative selling and the lack of Chinese demand were the principal factors in driving the weaker price action.  Export sales later this AM along with the weekly updated drought monitor.  The standoff in the Persian Gulf continues with the Straits of Hormuz remaining mostly closed.  Energy prices also a bit weaker with WTI July-26 crude oil down $3.50 a barrel near $92.50.  Spot RBOB is down $.10 per gallon while HO is off $.09.  Moderate to heavy rains fell across portions of the WCB the past 24 hours providing some drought releif.  Rains over the next 7 days to favor the central midwest, largely targeting Iowa.  Much of the nation’s midsection to hold in an above normal temperature and precipitation pattern into mid-June.  Scattered rains for northern growing areas of Brazil over the next week to 10 days if verified will benefit their 2^nd corn crop.  Healthy rains across S. Argentina to slow remaining corn and soybean harvest.  The US $$ is moderately lower, erasing yesterday’s gains.  US stock indices are sharply mixed.

Corn: 

July-26 and Dec-26 are both $.04 lower at $4.27 ½ and $4.55 ½ respectively.  July-26 traded to a new contract low while Dec-26 matched its February low.  Yesterday’s EIA data showed ethanol production at 326 mil. gallons was up slightly from the previous week, however below the pace needed to reach the USDA corn usage est. for a 6^th consecutive week.  Look for a lower usage est. in next week’s WASDE report.  Argentine will lower their corn export tax from 8.5% in 2026 to 7.5% by the end of 2027 and to 5.5% in Dec-28.  US export sales are expected to range from 40-80 mil. bu.

Soybeans: 

July-26 and Nov-26 beans are both $.06 ½ lower at $11.47 and $11.61 respectively.  July meal is down $.20 at $320.60 while July-26 oil is down 48 points at 78.23.  July-26 beans fell to a fresh 4-month low while a 5-week low for Nov-26.  Support for July is at $11.40 ½.  This week’s high in July-26 oil was the highest in 4 years.  Board crush margins are steady overnight holding near yesterday’s all-time closing high at $4.17 ½ bu. while bean oil PV rests near its all-time high at 55%.  Export sales for soybeans are expected to range from 6-28 mil. bu., 200-600k mt of meal and -5-14k mt of oil.  The American Fuel and Petrochemical Manufacturers trade group has filed a lawsuit challenging the EPA biofuel mandates arguing they increase compliance costs and fuel prices.  Argentina is lowering their current soybean export tax of 24% to 21% starting in Dec-27 and then down to 15% starting in Dec-28.  Soybean oil export taxes that range from 18-22% will fall to 11-14% by the end of 2028.

Wheat: 

Prices are within $.02 of unchanged with 2 sided trade across the 3 classes.  CGO July-26 is steady at $5.87 ¼, KC July-26 is down $.02 at $6.22, while MIAX July-26 is up $.01 at $6.27 ½.   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.  Argentina’s tax cut on wheat exports was announced a few weeks ago down to 5.5% from 7.5%.  US export sales are expected to range from 8-20 mil. bu.

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