Markets Attempt a Turn Around Tuesday

MORNING AG OUTLOOK

Mostly higher trade overnight as the agricultural markets attempt to form a “Turn Around Tuesday.”  No major surprises in yesterday’s crop progress/conditions data while the US weather pattern remains non-threatening looking into early July.  Energy prices are little changed in 2-sided trade after the US Treasury issued a 60-day license authorizing the production, delivery and sale of oil from Iran.  WTI Aug-26 crude oil is up $.05 a barrel near $73.90.  Spot RBOB is steady while HO is down $.01 per gallon.  Yesterday’s CFTC data showed MM’s were net sellers in corn and the soybean complex while moderate buyers of CGO and KC wheat.  Global weather is little changed.  Heat and dryness in France is shifting east into central Europe.  In the US the central Midwest dried out the past 24 hours with rains concentrated in the S. Midwest and Delta, along with the N. Plains and far WCB.  Precipitation thru the end of the week to favor the S. Midwest and N. Plains.  Only light rains for IA and N. IL.  Week 2 of the outlook forecasts above normal temperatures across much of the nation’s midsection.  Rains in SA to favor E. Argentina and S. Brazil.  The US $$ is moderately higher while stretching out to a 13-month high.  US stock indices are sharply lower led by the Nasdaq with futures off 2.7%.

Corn: 

July-26 and Dec-26 are both $.02 higher at $4.13 ½ and $4.41 ½ respectively.  The MM short position in corn at 46k contracts is the largest in 4 months.  AgRural is reporting Brazil’s 2^nd crop harvest has reached 16% as of late last week.  Crop ratings held steady at 68% G/E, in line with expectations.  Ratings improved in 11 states while declining in 7.  Overall conditions remain slightly above their historical average.  Ratings jumped 9% in IN, 7% in TN while 6% in TX.  Ratings fell 7% in OH and 6% in IL.  Emergence at 97% is in line with YA and the 5-year Ave.  5% of the crop is silking vs. 4% YA and the 5-year Ave. of 3%.

Soybeans: 

July-26 beans are $.03 ¼ higher at $11.19 while Nov-26 beans are up $.05 at $11.46 ½.   July-26 meal is up $2.70 at $302.50, while July-26 oil is down 34 points at 70.81.  Crush margins backed up $.02 overnight to $3.24 ½ after surging $.20 yesterday.  Prices will continue to be sensitive to Chinese demand, or the lack thereof.  US FOB offers at the Gulf are back to $.15-$.25 premium over Brazilian offers for July/Aug-26, while slightly below Sept-26 forward.  MM’s have been net sellers across the soybean complex for the past 4 weeks, during which time they sold just over 301k contracts, the most ever over a 4-week stretch.  Crop ratings held at 66% G/E, in line with expectations.  There was a 1% shift from good to excellent enabling the CC index to improve to 81.9, slightly above the historical average while the highest in 6 years.  Ratings improved in only 7 states, while declining in 11.  Ratings rose 16% in TN, 11% in MS and 9% in IN.  Ratings declined 8% in MS and 6% in LA.  Emergence at 93% is just above YA and the 5-year Ave.  9% of the crop is blooming, vs. 7% YA and 5-year Ave. of 6%.

Wheat:

Prices are mixed while holding with $.02 of unchanged.  CGO July-26 is up $.01 ½ at $5.99, KC July-26 is $.02 lower at $6.31 ½, while MIAX July-26 is also $.02 lower at $6.10 ¾.  Winter wheat ratings slipped another 1% to 26% G/E as there was a 1% shift from excellent to poor.   Overall ratings remain the lowest in 20 years for mid-June.  Harvest advanced more than expected to 40%, vs. 18% YA and 5-year Ave. of 24%.  Spring wheat ratings slipped 1% to 54% G/E matching YA.  Ratings improved in 2 states while falling in 4.  Argus raised their Ukraine 26/27 production forecast .6 mmt to 24.1 mmt citing better than expected yields in the SE regions.

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