Written Commentary
MORNING AG OUTLOOK
Grains are mixed. SU is up. CU is up. WU is down. KWU is down. MWU is down. Stocks are sharply higher. US Dollar is lower. Crude is higher. Gold is higher. Killing of key Hamas leader in Iran and Hezbollah leader in Beirut increased Middle East tension and offers support to Gold and Crude.
SU is near 10.20. Dalian soybean, soymeal, soyoil and palmoil futures were lower. US soybean futures continue to trend lower on talk of higher US 2024 soybean crop and concern about slow start to US new crop soybean sales. China may be asking for US Oct prices. If China imports 100 mmt, they need to buy 8 mmt per month or almost 300 mt per day. US soybean board crush margins are near season highs and suggest domestic demand is trying to offset lower export outlook. SU-SX spread has widened out to -10. SX-SH25 spread has widened out to -30. Widening of spreads suggest too much supply. There were 44 soybean deliveries, no soymeal and 936 soyoil.
CU is near 3.90. Dalian corn futures are consolidating near 12 month lows. Like soybean futures, corn futures have trended lower on increase fund selling and talk of higher US supply. CU-CZ spread is out to -15. CZ-CH25 is out to -16. Widening of spreads suggest too much supply. Brazil and Argentina farmers are increasing selling corn due to slide in soybean prices. Ukraine corn prices have rallied and suggest Ukraine is out of export market. EU corn prices are also higher and suggest more imports than exports.
WU is near 5.23. Managed funds were small net sellers on Tuesday, Wheat futures challenged by talk of lower Black Seas supplies and slight rally in Russia export prices and drop in French wheat quality and size versus slow import buyers demand and talk of slower World economy. Tunisia bought Russia wheat. Despite talk of lower Russia crop and ongoing dry weather, Russia remains aggressive in offering wheat for exports. Russia July wheat futures are near 4 month low. Jordan bought Bulgaria wheat. WU-WZ spread is out to -25. KWU-KWZ spread is out to -16. Widening of spreads suggest higher US supply. It is early but Argentina is dry and cold. Central Brazil is in dry season. Australia wheat futures are near 4 month lows.
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