Written Commentary
SOYBEANS
Soybeans and soymeal may be hitting the pause button after yesterdays gains. SK is near 16.00 and 450 SMK. Weekly US soybean export sales were 1.3 mmt old crop and 1.5 mmt new. Total old crop commit is near 48.1 mmt vs 59.6 ly. USDA goal is 55.8 vs 61.5 ly. Trade still has to figure out how to replace the possible drop in SA soybean crop of 36-37 mmt and what price it may take to ration demand. USDA estimates World soybean crop at 364 mmt vs 366 ly. Of the total, Brazil is 134, US 120 and Argentina 45. Total crush demand is 320 mmt with China 94, US 60, Brazil 47 and Argentina 40. World exports are 165 mmt vs 164 ly. Brazil 90 and US 55. Brazil was 81 and US 61 last year. One can see how important SA crops are to demand. Prices should trend higher to ration demand.
CORN
Corn futures may also be on hold. CK is near 6.46. Option volume and volatility is on the rise both calls and puts. Calls for end user coverage and puts for unsold cash inventories. Some estimate US farmer has sold 75-80 pct of the 2021 crop and 25 pct of the 2022 crop. Most feel he will continue to sell on rallies. Weekly US corn export sales were 820 mt. Total commit is near 46.5 mmt vs 58.5 last year. USDA goal is 61.6 vs 69.9 ly. Trade still has to figure out how to replace the possible drop in SA corn crop of 23-25 mmt and what price it may take to ration demand. USDA estimates World corn crop at 1,205 mmt vs 1,123 ly. Of the total, US is 384, China 272, Brazil 114, Argentina 54 and Ukraine 42. Total domestic feed demand is 751 mmt with China 214, US 143, EU 59 and SE Asia 40 mmt. World exports are 203 mmt vs 180 ly. US 61, Brazil 43, Argentina 39 and Ukraine 33. One can see how important SA and Ukraine crops are to demand. Prices should trend higher to ration demand. Chicago Fed Reserve latest Ag letter estimated 2021 farm loan demand Index fell for the 4th straight year and the lowest since 1986. Q4 farmland yoy values were up 30 pct in IA, 22 pct in IN and 18 pct in IL and 8th consecutive quarter of gains in farmland values. 2WD tractor sales were up 10 pct, 4WD up 120 pct, combines up 126 pct.
WHEAT
Wheat futures ended higher. Trade may be putting on a Russia/Ukraine tension premium into the long holiday weekend. CBOT grains are closed Monday due to holiday. Weekly US export sales were only 118 mt. Total commit is 17.4 mmt vs 23.4 ly. USDA goal is 22.0 vs 27.0 ly. USDA estimates World wheat crop at 776 mmt vs 775 ly. Of the total, EU is 139, China 137, India 109, Russia 75, US 44, Australia 34 and Canada 21. Total domestic demand is 788 mmt with China 147, EU 107. India 104, N Africa 48,Middle East 40, US 30 and SE Asia 25. World exports are 206 mmt vs 202 ly. EU 37, Russia 35, Ukraine 24, Australia 25 and US 22. Some feel combined EU, Russia and Ukraine exports could be down 10-12 mmt from USDA estimate. You can see how important EU and Black Sea exports are. Major imports are N Africa 29 mmt, SE Asia 26 mmt and Middle East 24. NOAA 30 and 90 day US south plains forecast calls for below rains and above temperatures.
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.
