Prices Drift Lower After 2-Sided Trade Overnight

MORNING AG OUTLOOK

Two sided trade across the Ag space overnight as prices drift lower as we approach the pause.  Energy prices are also little changed as spot crude oil consolidates near $95, down about a buck.  Attention turns to the Fed Reserve as they conclude their 2 day FOMC meeting.  While markets expect no change to their Fed funds range of 3.5%-3.75%, traders will be dialed in to Fed Chair Powell’s guidance on whether energy prices may guide future Fed policy.  Energy products are higher with RBOB up $.01 ½ per gallon with heating oil up $.03.  The Straits of Hormuz remains closed as Pres. Trump states the US doesn’t need help from NATO.  Trump’s trip to Beijing has been postponed, now expected in about “five or six weeks.”  Yesterday’s major headline being the Trump Admin has invited a group of farmers and representatives from the biofuels industry to the White House for an agricultural event on Fri. March 27^th.  The market expects the Administration will finally reveal their RVO and SRE reallocation plans for 2026 and 2027.  Much of Argentina will be in a wetter than normal pattern over the next week to 10 days.  Beneficial for late crop development however may present modest harvest delays.  Rains in Brazil continue to favor central and northern growing areas while the South remains too dry.  Outside of light precipitation in the Great Lakes region and ECB much of the central US Midwest will be dry for the next week.  Above normal temperatures will build across the S. plains and WCB thru this weekend.  Normal to below normal in the East.  The US $$ is steady while stock indices are higher.

Corn: 

May-26 is down $.02 at $4.52 with Dec-26 $.01 ½ lower near $4.80.  EIA data is expected to show ethanol production range between 320-338 mil. gallons LW, vs. 331 mil. the previous week.  In the short term look for spot futures to trade between $4.40-$4.80 with energy prices likely to drive the directional breakout.  Chinese customs data showed they imported 550k mt of corn in Jan/Feb combined, up 208% over YA.

Soybeans: 

Prices have weakened with May-26 beans are down $.07 at $11.50 while Nov-26 is down $.02 ¼ at $11.29, both holding within yesterday’s range.  May-26 meal is up $1 at $312.70 while May-26 oil is down 65 points at 65.32.  Spot board crush margins surged another $.19 yesterday to $2.54 ½ bu., the highest since Aug-23, while bean oil PV bounced back to 51.4%.  While US crush rates remain record high and support another 10-20 mil. bu. increase to the current USDA forecast of 2.575 bil. bu., exports are too high without additional Chinese purchases.  I suspect even higher energy prices and/or renewed buying from China, are needed for spot soybeans to trade back above $12.  If neither happen look for prices to retest $11 this Spring.  Brazil’s Ag. Ministry said they have stepped up their protocols to a ensure a higher quality of soybean shipments to China and do not expect to see a halt in exports to the world’s largest importer.  They went on to state that only vessels that meet their higher quality standards will leave their ports.

Wheat: 

Prices range from down $.02 in CGO and KC to up $.02 in MIAX.  CGO May-26 is down $.01 ¾ at $5.88 while KC May-26 is down $.01 ¼ at $6.05 ½.  Wild temperature swings and growing drought in the SW plains should provide underlying support.  Chinese wheat and wheat flour imports in Jan/Feb at 2.16 mmt were up over 1000% from YA.  SovEcon raised their Russian wheat export forecast for Mch-26 to 3.8 mmt, well above the historical average of 3.1 mmt.

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