March 19, 2019 | Follow us on Twitter @TradeADMIS | Download PDF
Soymeal, corn and wheat ended unchanged. Soybeans and soyoil was lower. Good battle between trade bears and US weather bulls. Trade assumes US Fed will not raise rates. This may be weighing on the US Dollar.
Soybeans closed lower on low volume. Managed funds are short soybean and soymeal. Uncontrolled spread of African Swine fever in China and now Vietnam may reduce Hog numbers there, demand for protein feed and soybean imports. Better than expected demand for US soymeal and concern about US crushers soybean inventory during floods may be offering support. Trade assumes a trade deal with China could rally prices but talk today that US trade hawks could scuttle talks offered strong overhead resistance.
Corn futures closed unchanged on low volume. Funds are record short corn futures. Bears could see the World 2019 corn crop another record 1,102 mmt vs 1,100 this year. Total use could also be a record 1,130 mmt vs 1,120 this year. This would leave World corn end stocks near 285 vs 321 this year. Getting more calls about why futures are not higher due to wet US spring. Some feel farmers may be forced to switch from planting corn acres in 2019 to soybean in the wettest area. Heavy rains and quick snow melt across US west Midwest has flooded fields, washed out roads and slowed rail logistics. Farmers are hoping for drier weather to start 2019 field work. So far the market feels there is enough time for the weather to improve which limits the upside in futures. WSJ estimates that 9 million people and thousands of livestock have been impacted by flooding. This should be a dry week for most of the Midwest but rains are forecasted to return next week.
Wheat futures closed mixed. Chicago was unchanged and KC slightly lower on low volume. Minn traded higher on continued logistics concern due to wet spring. USDA lowered the KS wheat crop rating but increase CO and OK. Weekly US wheat exports were 6 pct behind last year vs USDA estimates of a 7 pct increase. Funds are still short Chicago and KC futures. Technical are very oversold. World 2019 wheat crop could reach a record 769 mmt vs 731 this past year. Total use could be near 763 vs 740. Exports could be near 184 vs 175. This would leave end stocks near record 279 mmt. This could still weigh on prices into the fall if realized.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
Mar 20 | Download PDF
FOMC is Main Event Today
STOCK INDEX FUTURES
According to press reports, the U.S. and China are moving closer to a formal trade agreement. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer reportedly are traveling to China next week, and Chinese negotiators are heading to Washington after that for high-level discussions in an attempt to get a trade deal wrapped up. Some analysts are speculating that an agreement will be reached, but it won’t include important demands from the U.S. that address theft of intellectual property.
The two-day Federal Open Market Committee meeting concludes today. A statement will be released at 1:00 central time, and Fed Chair Powell will hold a press conference at 1:30.
Following a 13% rally this year, the benchmark S&P 500 is now 3.5% away from its record closing high that was registered in September.
Since the lows were made in late December, stock index futures have been performing better than the news would suggest, which should be viewed as a sign of long term strength. CURRENCY FUTURES
Much of today’s trade appears to be evening up ahead of the FOMC statement.
Germany's producer price inflation was unchanged in February when an acceleration was expected, after slowing in the previous two months.
The producer price index increased 2.6% year-on-year, which was the same as in January. Economists had expected a higher rate of 2.9%.
The British pound is lower due to the uncertainties of the Brexit situation.
U.K. Prime Minister May is expected to ask for only a short extension, as the March 29 Brexit deadline fast approaches. This would allow the British Parliament to vote for a third time on a version of May’s Brexit agreement.
The pound is lower in spite of news that U.K. consumer price inflation unexpectedly accelerated in February for the first time in six months.
Consumer prices in the U.K. rose 1.9% in the year through February, which compares with an annual gain of 1.8% in the previous 12 months. Economists had expected the inflation rate to remain unchanged. INTEREST RATE MARKET FUTURES
The Federal Open Market Committee is expected to keep its fed funds rate unchanged. Analysts anticipate the Fed will maintain the dovish tone it struck at its January meeting when it put its rate increasing plan on hold and became “data dependent.”
In addition, it is anticipated that the policy statement will shed light on the long awaited details of the Fed’s plans to stop reducing its holdings of Treasury bonds.
A flurry of downbeat economic data this month has supported market expectations that the FOMC may reinforce a halt to further increases in interest rates.
Financial futures markets are predicting there is a 71% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 28% chance for a 25 basis point or more decline in the fed funds rate in 2019 and a 1% chance of a rate increase.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
This special monthly report recaps the financial, energy, metal, currency, grain and livestock market trends exclusively by the ADMIS Research Team. February Edition January 2019 Edition December Edition November Edition October Edition
USDA SUPPLY/DEMAND REPORT (released March 8) Download PDF
US EMPLOYMENT DATA (released Jan 4) Download PDF
US EMPLOYMENT DATA (released Dec 7) Download PDF
US Q3 GDP (released Nov 28) Download PDF
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