Written Commentary
Grains are mixed in low volume. SN is up 3 cents and near 8.66. CN is down 1 cent and near 3.26. WN is up 3 cents and near 5.08. US stocks are lower. Crude is lower. US Dollar is lower. Topping action in financial and energy markets may be weighing on prices. There was talk yesterday that China may have bought a few cargoes of US soybeans.
Chinese Ag futures (Sep) settled up 101 yuan, up 7 yuan in Corn, down 3 in Soymeal, up 18 in Soyoil, and up 78 in Palm Oil. Malaysian palm oil prices were up 6 ringgit at 2,394 (basis August) at midsession supported by latest trade data.
Last night’s GFS model run was similar to the midday GFS model run in showing no rain of significance in the central and southwest US plains, such as the Texas Panhandle, western Oklahoma, southwestern Kansas, and West Texas. Not much rain is likely in this area the next two weeks and drought will worsen and expand some raising concern for unirrigated summer grains, oilseeds, and cotton
Last night’s GFS model run was notably wetter in the Corn Belt Jun. 19 – 24. The increase was due to a frontal boundary and various associated weather disturbances shown to shift south into the region. World Weather is looking for a warmer and drier US Midwest July.
This week, USDA will update US/World supply and demand. Trade looks for US corn crop near 15,917 mil bu vs USDA 15.995 and soybean crop at 4,138 mil bu vs 4.125. Trade also looks for US 2019/20 corn carryout near 2,163 vs 2,098, soybean near USDA 580 and Wheat near USDA 978. Trade looks for US 2020/2 corn carryout near 3.356 vs USDA 3,318, soybean near 429 vs USDA 405 and wheat near USDA 909.
The rally across commodities has gotten ahead of fundamentals with the exception of metals, Goldman Sachs said in a note, adding that it was hesitant to recommend a long position this early in the cycle; the Wall Street bank sees downside risks in agricultural and energy markets, citing the recent strength as surprising given the massive inventory overhangs and depressed demand; without a shift in balances, any rally in physical commodity markets is unsustainable,” Goldman said, adding the climb was “too much, too fast in oil, but not metals; ” the metals markets are tight and “extremely strong” Chinese demand from construction and infrastructure sectors in May has exceeded even the most optimistic projections.
On Tuesday, Managed funds were net sellers of 7,000 contracts of SRW Wheat; net sold 15,000 Corn; net even Soybeans; net sold 2,000 Soymeal, and bought 1,000 Soyoil. We estimate Managed Money net short 17,000 contracts of SRW Wheat; net short 274,000 Corn; net long 21,000 Soybeans; net short 49,000 lots of Soymeal, and; are net long 15,000 Soyoil.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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 ADM. 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.
