Prices Started to Firm up

MORNING AG OUTLOOK

Prices have started to firm up this AM after mixed trade overnight.  US crop updates along with CFTC-COT data was generally in line with market expectations.  Yesterday’s strength fueled by speculative buying was fundamentally driven by a more threatening weather forecast along with reports of Chinese interest in US soybeans.  After the close wire serviced reported China’s state owned COFCO bought between 300-600k mt of US soybeans for Sept-26 shipment.  In addition Pres. Trump stated late yesterday that Chinese leader Xi would visit the White House in late September.  All eyes will be on USDA flash sales for confirmation of Chinese purchases.  Rains the past 24 hours heaviest across MN with scattered precipitation in the Delta, the SE and portions of the ECB.  Rainfall this week will favor the N Midwest, ECB and the Great Lakes region.  Much above normal temperatures are expected across much of the nation’s midsection by late this weekend as a high pressure ridge is expected to expand across the US plains.  World Weather doesn’t believe this ridge will remain stationary for an extended period of time.  Cooler temperatures with the return of shower activity is expected, particularly for the eastern portions of the Midwest by the 2^nd half of July.  Hot/dry for central and W. Europe this week further stressing row crops.  Above normal temperatures in SA with rains limited to WC and interior south of Brazil.  Energy prices are mixed and little changed.  The US $$ is slightly higher in 2-sided trade while US stock indices are steady to down 1%.

Corn: 

Sept-26 and Dec-26 are $.02 ¼ higher at $4.40 ½ and $4.60 respectively with both trading to 1-month highs.  50 and 100-day MA resistance for Dec-26 rest at $4.68 ¾ and $4.73.  CFTC data showed MM’s were buyers of just over 23k contracts, reducing their short position to 46k while index funds were net sellers of another 35k contracts.  After yesterday’s close of trade speculative traders have likely flipped back to net long.  Crop ratings held at 67% G/E.  Ratings improved in 7 states while declining in 11.  Overall ratings remain slightly above the historical average.  Ratings improved 3% in MO and SD while 2% in PA and TN.  Ratings fell 10% in NC, 7% in OH and 5% in ND.  16% of the crop is silking vs. 17% YA and 5-year ave of 14%.  3% of the crop is in the dough stage.

Soybeans: 

Aug-26 and Nov-26 beans are both $.04 ½ higher at $11.88 ½ and $11.96 ¾ respectively.   Also, a new 1-month high for both.  Next resistance for Aug-26 is at $12.02.  Aug-26 meal is up $1.50 at $314.40 with 100-day MA resistance at $315.20.  Aug-26 oil is up 21 points at 67.97.  Crush margins (Aug-26) rebounded $.02 to $2.52 bu.  Strong price action combined with reports of Chinese purchases of US soybean led to lower basis in Brazil where they are back to a $.05 – $.20 discount to US beans through Nov-26.  Chinese purchases will need to reach nearly 1 mmt per week if they are to secure 25 mmt of US soybeans before Brazil’s harvest in early 2027.  The combined MM long position across the soybean complex as of last Tues. at 125k contracts is a 5-month low.  MM’s have been net sellers for 6 consecutive weeks.  That combined long position is likely closer to 175k after yesterday’s close. Crop ratings slipped 1% to 64% G/E, in line with expectations.  Overall ratings remain slightly above the historical average.  Ratings improved in 8 states, declined in 8 while holding steady in 2.  Ratings rose 6% in LA, 4% in MO, and 3% in IL, SD and TN.  Ratings declined 10% in ND and MI, 9% in NC and 7% in KY and MS.  34% of the crop is blooming, vs. 30% YA and 5-year ave of 28%.  9% of the crop is setting pods, just above 7% from YA.

Wheat: 

Prices are steady to $.02 higher across the 3 classes.  CGO Sept-26 is up $.02 ¼ at $6.16 ¼, KC Sept-26 is $.00 ¾ higher at $6.50 ½ while MIAX Sept is up $.01 ½ at $6.31.  Resistance for CGO rests at its 100-day MA at $6.18 ¾.  KC Sept-26 is pretty resting right at its 100-day MA with next resistance at $6.69 ¼.  MM’s were net buyers of 2k CGO futures, 8k KC while selling 8k MIAX.      WW ratings held at 26% G/E, however there was a 1% shift from poor to VP.  Overall ratings finished amongst the lowest ever.  Harvest advanced 21% to 59%, vs. YA and 5-year ave of 51%.  Spring wheat ratings slipped 2% to 57% G/E vs. expectations for a 1% increase.  Overall ratings remain above their historical average.  Conditions improved in 2 states, while declining in 4.  54% of the crop is headed, in line with the 5-year ave.

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