Soybeans, soymeal and wheat traded higher. Corn was unchanged. Lower World palmoil trade weighed on soyoil futures. US stocks and crude continues lower on coronavirus worried. US Dollar, gold and silver also traded lower.
Soybean may have seen some short covering before March first notice and talk that after March 2 China could begin to offer waivers for import of US Ag goods including soybeans. One concern is that China demand for soybeans could be slowing. There is unconfirmed talk that China may have asked Brazil soybean shippers to delay March soybean cargoes to China. There is some talk that the fear of the coronavirus spreading could slow World food and feed demand and eventually trade. USDA estimates World 2019/20 wheat trade near 182.8 mmt sv 172.5 ly, corn 165.7 vs 181.0 ly, soybeans 151.6 vs 148.1 ly and soymeal 67.8 mmt vs 66.4 ly. Total 2019/20 trade of all 4 commodities is est near 567.8 mmt vs 568.0 ly and 546.0 in 2018. We estimate managed funds are net short 107,000 soybeans, 80,000 soymeal and long 29,000 soyoil. They are net short of corn, wheat, soybeans, soymeal and soyoil a combined 229,000. This is a big short for February and going into the US 2020 growing season. It reflects more the concern about demand.
Corn futures tried to bounce off Mondays lows on some short covering. Managed funds continue to add to net corn position. Lack of any follow through buying limited todays gains. Lower US equity and energy trade also offered resistance. Corn chart is suggesting a lower price trend. Recently, corn futures open interest has increased 139,000 contracts. This could also suggest new shorts. We estimate managed funds are short 107,000 corn. This suggest a total net short of corn, wheat, soybeans and soymeal commodities near 229,000. This is a big short for February and going into the US 2020 growing season. It reflects more the concern about demand. There is talk that Brazil may be offering corn for export for July at prices below US. Argentina is offering corn cheaper than US for April forward. There is some talk that the fear of the coronavirus spreading could slow World feed demand and eventually trade. USDA estimates World 2019/20 corn trade near 165.7 vs 181.0 ly. Total 2019/20 corn, wheat, soymeal trade of all 4 commodities is est near 567.8 mmt vs 568.0 ly and 546.0 in 2018. WHEAT
Wheat futures edged higher on some short covering after recent losses. WK held key support near 5.28. Have not traded below that level since late November. USDA rated the KS 2020 wheat crop 35 pct good/ex vs 34 last week and 51 last year. Wheat conditions also improved in OK, CO, IL and KY. Spring is just around the corner with recent rains improving the outlook for the US 2020 winter wheat crop. Ukraine also reported improved crop conditions with record high wheat planted area. We estimate managed funds are net long 36,000 wheat contracts with total net corn, soybean, soymeal, soyoil and wheat short near 229,000. This is a big short for February and going into the US 2020 growing season. It reflects more the concern about demand. There is some talk that the fear of the coronavirus spreading could slow World food demand and eventually trade. USDA estimates World 2019/20 wheat trade near 182.8 mmt vs 172.5 last year. Total 2019/20 corn, wheat, soybean and soymeal trade is est near 567.8 mmt vs 568.0 ly and 546.0 in 2018.
Feb 26 Stock Index Futures Partially Recover PDF STOCK INDEX FUTURES
U.S. stock index futures are higher and substantially above the overnight lows.
Researchers have begun the first study in the U.S. of an experimental drug aimed at treating the coronavirus, according to the National Institutes of Health.
The NIH is also expected by the end of April to begin testing on healthy volunteers an experimental coronavirus vaccine. A vaccine could prevent new infections, but it would not treat confirmed cases.
Mortgage applications in the U.S. increased 1.5% in the week ended February 21 from the prior week, which was down 6.4%.
The 9:00 central time January new home sales report is expected to show 710,000.
There was one encouraging sign that stock index futures may be trying to make a bottom soon. In yesterday’s trade, not all of the flight to quality vehicles were higher. In fact, the U.S. dollar and gold were lower when they normally would be expected to be higher in light of falling stock index futures. Unexplained movements in flight to quality vehicles and in spreads can often occur at extremes in market moves. CURRENCY FUTURES
The U.S. dollar is a little higher, while the euro currency is lower.
Longer term, higher prices are likely for the U.S. dollar and lower prices are likely for the euro currency.
The next upside objective for the U.S. dollar index is 100.000.
Higher prices longer term for the greenback are likely on the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks. INTEREST RATE MARKET FUTURES
Futures are lower today in light of a partial recovery in stock index futures.
Federal Reserve speakers today are Robert Kaplan at 8:25 and Neel Kashkari at 1:00.
The Treasury will auction five notes today.
Yesterday, Federal Reserve Bank of Dallas President Robert Kaplan said events are still too fluid around the coronavirus outbreak to say that the U.S. central bank needs to lower short term interest rates.
However, financial futures markets are saying something different. Based on financial futures, currently there is 79% probability that the Federal Open Market Committee will lower its fed funds rate at its June 10, 2020 policy meeting. Yesterday the probability was 75%. 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. March Edition February Edition January 2019 Edition December Edition November Edition October Edition
USDA SUPPLY/DEMAND REPORT (released February 11) Download PDF
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