As Energies Soar, So Do Ags

MORNING AG OUTLOOK

As energy prices continue to soar, so do agricultural commodities.  The inflationary implications from higher energy costs continues to fuel speculative buying across a host of commodities.  Spot crude oil surged another $5+ overnight trading above $86 a barrel for the first time in 23 months.  Spot RBOB hit a fresh 22 month high with heating oil a new 3 ½ year high.  Qatar’s Energy Minister and CEO of QatarEnergy, Saad al-Kaabi stated in an interview with the Financial Times that oil prices could hit $150 barrel within weeks as ME countries shut down production.  Expect volatility to remain elevated.  Open interest across the Ag. space soared yesterday with the wave of speculative buying.  Corn was up 45.5k, beans +4.5k, bean +8.8k, CGO wheat +10.2K, KC wheat +1.1k while meal was down just over 100 contracts.  Analysts expect little change in US ending stocks in next Tues. USDA WASDE report.

Weather in Brazil remains mostly favorable however rains across northern growing areas will slow the remaining soybean harvest and 2^nd corn plantings.  Argentina is trending wetter in the north, dryer in the South.  Heavy rains continue to track across the central and southern Midwest.  Heaviest totals past 24 hours in S. IA and the Ohio Valley region.  Over the next week heaviest rains expected in the Delta and Gulf coast region, slowing plantings in these areas.  Only scattered amounts for the WCB and N. plains.  The US $$ is steady awaiting US jobs report that is expected to show payrolls expanded by 50k in Feb-26.  US stock indices are down .65%-1.0%.

Corn: 

May-26 is up $.05 at $4.58 ½ hitting a 2 ½ month high.  New crop Dec-26 is up $.03 ½ at $4.81 ½, the highest in nearly 2 years.  Export sales remain strong, up 31% YTD vs. the USDA forecast of up 15.5%.  The BAGE estimates Argentine harvest has reached 7% with early yields averaging 8.1 tons/HA, vs. the USDA yield est. of 7.1.  The BAGE kept their production forecast unchanged at 57 mmt, vs. USDA at 53.

Soybeans: 

May-26 beans are up $.10 at $11.89 ¼ the highest since May-24.  May-26 meal is up $3.30 at $312.30 while May-26 oil is up another 50 points at 66.20.  New contract high for May-26 oil overnight as it looks to extend a higher close to a 10^th consecutive session.  Fresh 18 month high on the weekly chart.  Spot board crush margins surged another $.14 yesterday to $2.27 bu., matching the high from last summer.  Bean oil PV reached a new all-time high at 51.7%.  Seems unlikely we’ll see additional Chinese buying of US beans with Gulf FOB offers running $.90-$1.30 over Brazilian offers into the summer months.  Look for some shifting of bean oil demand away from biofuels into other domestic usage and/or higher stocks.  No big changes expected for SA production.  The BAGE reports Argentine crop ratings improved 1% to 30% G/E.  Agroconsult raised their Brazilian production forecast nearly 1 mmt to 183.1 mmt vs. the USDA forecast of 180 and the highest est I’ve seen leading up to next Tues. WASDE report.

Wheat: 

Prices range from $.12 to $.16 higher.  CGO May-26 is up $.16 ¼ at $6.00.  So far prices have stalled just below this month’s high of $6.03 ¾.  KC May-26 is up $.15 ½ at $6.07 ½ jumping out to a 9 month high.  The UN’s Food and Agriculture Organization estimates global wheat production will fall to 810 mmt in 2026 as lower prices curb plantings.  The FAO food index rose .9% in Feb-26 after 5 consecutive months of declines.  At this point it would appear we’ll see a much bigger jump in March.

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