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Soybeans trended mixed on concerns that US may impose tariffs on additional China goods. This continues to raise concern that China will reduce US soybean exports and increase from Brazil. There was also talk that China economy may be slowing which could also recue feed demand. China is also trying to find non-US origin sources of protein to replace US soybean imports. Some fear that this increase US soybean carryout and eventually force a drop in US production. Weekly US soybean export sales were near 9 mil bu. Total commit is near 2,120 mil bu vs 2,218 last year. USDA goal is 2,085 vs 2,166 last year. Several non-China countries bought US soybeans. New crop sales increased 22 mil bu including sales to unknown and Argentina USDA est US 2018/19 soybean exports near 2,040. Some could see soybean prices trend lower into US harvest unless US and China resolve trade issues or US soybean demand improves even without China buying. Index funds continue to liquidate net long grain positions due to recent steep price drop and loss in equity.
Corn futures closed higher and tended to follow a higher trade in Wheat. Better than expected weekly US corn sales offered support. Corn bulls still feel World corn end stocks and stocks to use ratio are tight and should suggest a rally in futures. Above average US 2018 corn crop rating, large US 2017 supplies still unsold and unknown US trade issue esp with Mexico and China offers resistance to the trade. Weekly US corn export sales were near 25 mil bu. Total commit is near 2,312 mil bu vs 2,214 last year. USDA goal is 2,400 vs 2,294 last year. Japan and Mexico were the best buyers. New crop sales increased 30 mil bu including sales to Mexico and South Korea. USDA est US 2018/19 corn exports near 2,225. Some could see corn prices try to trend higher post US corn harvest given drop in World supplies.
Wheat futures closed higher. More talk of lower EU and Russia 2018 supplies offered support. Most still feel large US spring wheat crop and good World 2017 supplies should limit the upside in wheat prices for now. Weekly US wheat export sales were near 11 mil bu. Total commit is near 236 mil bu vs 346 last year. Trade will need to see a pick up in new sales to support higher prices. Interesting discussion among global analyst about World 2018/19 wheat outlook. Some feel that World crop could drop another 8 mmt due to lower est of Australia, EU and Russia. Same group could see higher domestic demand esp in Russia and EU. This could lower World wheat end stocks another 15 mmt. World stocks would then be closer to 245 mmt vs USDA est of 261. Take out China stocks of 136 and stocks would be down to 109 vs 147 last year. Some feel this could suggest wheat prices may be undervalued and due for a rally esp post Russia harvest.
July 20 | Download Report
STOCK INDEX FUTURES
Futures fell initially, but are mixed now after President Donald Trump toughened his stance against China and said he is ready to impose levies on $500 billion worth of imports from the Asian country.
There are no major economic reports scheduled for today.
U.S. stock index futures continue to hold up well in spite of the ongoing global trade uncertainties, as the still relatively low global interest rate environment and the mostly stronger than estimated U.S. corporate earnings reports remain supportive. CURRENCY FUTURES The U.S. dollar quickly fell from its highs yesterday when President Trump said he is unhappy that Federal Reserve Chairman Jerome Powell keeps raising interest rates.
There was additional selling in the greenback today when President Trump said “tightening now hurts all that we have done” and also when President Trump accused China, the European Union and other countries of manipulating their currencies.
The British pound advanced on news that U.K. government borrowing in the April-to-June period fell to its lowest level since 2007.
The Japanese yen is higher after it was reported that Japan's inflation picked up in June for the first time in four months, although only slightly. Core consumer prices increased .8% from a year earlier in June, marking the 18th consecutive month of year-to-year increases.
The Canadian dollar is higher after a report showed inflation in Canada climbed 2.5% in June, which is the largest increase in over six years. Expectations were for inflation to increase 2.3%, according to economists.
In addition, the currency of Canada was supported by news that retail sales in Canada increased 2% in May, when a gain of 1% was estimated.
INTEREST RATE MARKET FUTURES Futures are steady at the front end of the curve and are lower at the long end.
The probability of a fed funds rate hike at the Federal Open Market Committee’s September 26 meeting is 89%.
Although flight to quality buying is likely to come into the market from time to time, the longer term trend for futures is lower.
This special monthly report recaps the financial, energy, metal, currency, grain and livestock market trends exclusively by the ADMIS Research Team. June Edition May Edition
USDA SUPPLY/DEMAND REPORT (released July 12) Download PDF
US JUNE EMPLOYMENT DATA (released July 6) Download PDF
USDA QUARTERLY STOCKS/ACRES REPORT (released June 29) Download PDF
US Q1 GDP (released June 28) Download PDF
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