Lower Trade As Market Gives Back Portion of Price Surge

MORNING AG OUTLOOK

Lower trade across the Ag space this AM as markets give back a portion of yesterday’s price surge.  This week’s US/China trade summit in Washington DC fueled heavy speculative buying on hopes a trade deal will result in China’s purchase of US corn and wheat in addition to the 25 mmt of soybeans.  Despite the speculative buying, open interest across the Ag. space was mostly lower.  Yesterday’s US crop updates were in line with expectations.  Energy prices are also lower after a Japanese news outlet reported Iran offered to reopen the Straits of Hormuz if the US took steps towards de-escalation.  Nov-26 WTI crude oil is down $1.80 per barrel at $90.55 while RBOB is down $.02 per gallon with HO $.07 lower.  The Russia/Ukraine war continues to rage on.  Moderate to light rains in the ECB, NC Midwest and the W. Plains in the past 24 hours.  The central Midwest is expected to get a break from the recent heavy rains with showers expected to favor the far ECB and Plain states this week.  Gradual warming this week as temperatures reach above normal readings by the weekend.  Week 2 of the outlook has above normal precipitation across the nation’s midsection.  In South American rains this week will favor the interior south of Brazil, while scattered activity in the EC region and parts of Argentina.  Hot/dry for WC region of Mato Grosso and N. MGDS.  Hot is W. Europe with scattered rains expected in France.  Cooler in E. Europe  with scattered showers.  The US $$ is slightly lower after stretching out to a 2-month high.  US stock indices are steady to higher.

Corn: 

Dec-26 futures are down $.04 at $5.39 in 2-sided trade.  Prices continue to hold within the range from Fri. Sept. 11^th,  USDA report day.  MM’s bought just over 30k contracts of corn yesterday  extending their long position to 440k contracts, which would be a new record high.  O.I however, was down a couple hundred contracts.  Crop ratings held steady at 57% G/E.  Overall ratings held at this seasons low, just below the historical average.  Ratings improved 5% in ND and 3% in MO and MN.  Ratings fell 10% in MI, 5% in PA and 3% in CO and NE.  92% of the crop is dented, 58% is mature, both above YA and the 5-year Ave.  Harvest has reached 13% vs. 10% YA and 5-year Ave. of 11%.  Good progress was made in the South with KS, KY, MO, TN and TX all above their historical average.  Ratings suggest an average US yield of 178.2 bpa with production at 15.773 bil bu down 24 mil. from last week while just below the USDA forecast at 15.80 bil bu.

Soybeans: 

Nov-26 beans are down $.07 at $13.21, rejecting trade above yesterday’s high.  Oct-26 meal is $1.40 lower at $365.20 while Oct-26 oil is down 60 points at 67.68.  Crush margins backed up another $.04 ½ at $2.35 ½ bu.  MM’s were net buyers of 13k contracts of soybeans, 8.5k meal and 3k bean oil yesterday.  O.I. was up 3k in beans, while down 8.7k in meal and 7k in oil.  Overnight Sinograin auctioned off just over 62% of the 543k tons of soybeans offered.  China also announced plans for another auction of 514k  tons next Monday.  AgRural reported Brazil’s 2026/27 crop is just over 1% planted.  US crop ratings held steady at 58% G/E.  Composite ratings remain at cycle lows while just above the historical average.  Ratings rose 9% in ND and 2% in MN, MO and NC.  Ratings fell 8% in MI, 3% in AR and 2% in KS.  62% of the crop is dropping leaves vs. YA and 5-year Ave. of 58%.  Harvest has reached 12% vs. YA and 5-year Ave. of 8%.  Updated ratings suggest an average US yield of 52.5 bpa with production at 4.511 bil bu down fractionally from last week while below the USDA forecast of 4.535 bil.  I’d estimate Chinese purchases are approaching 14 mmt.  The trade remains hopeful that US/China will drop reciprocal tariffs this week following the Trump/Xi summit.

Wheat: 

Prices range from $.06 to $.12 lower.  CGO Dec-26 is down $.08 at $7.18 ½, KC Dec-26 is $.11 lower at $7.83, while Dec-26 MIAX is $.06 lower at $7.40.  Russian and Ukrainian forces continue military strikes on port infrastructure and cargo vessels despite Russian leader Putin and Turkey’s Pres. Erdogan recent discussion for a moratorium that would allow the safe passage through the Black Sea. Russia set export duties on grain exports at zero through the end of 2026.  US spring harvest advanced to 96%, matching the YA pace and 5-year Ave.  Winter wheat plantings at 17% are below the 19% pace from YA and the 5-year Ave. of 21%.  2% of the crop has emerged.

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