Written Commentary
by Steve Freed
Soybeans, soymeal, soyoil, corn and wheat are lower. US stocks are lower. US Dollar is higher. Selling in grains follow negative USDA report. US Fed Chairmen talking lower economy and more stimulus will be needed is weighing on stocks and commodities.
SOYBEANS
Soybeans traded lower. US Fed Chairman comments about lower US economy triggered new selling in grain futures. USDA did announce new US old crop and new crop soybean sales to China. Good rains are forecasted for the next 4-5 days across parts of the east HRW plans and much of the east Midwest. Next week temps warm to near to above normal. Weekly US Soybean export sales are estimated near 500-1,000 mt vs 653 last week. USDA could still be 50 mil bu too high in 2019/20 exports. US farmers could add 1.5 million more soybean acres. USDA estimates US 2020/21 soybean exports up 375 mil bu but China imports are up only 180 mil bu and 2020/21 South America crops are estimated to increase 375 mil bu. This could suggest US 2020/21 soybean carryout could be closer to 550 than USDA 405. Informa will be out tomorrow with an update on US 2020 planted acres by crop.
CORN
Corn futures traded lower. On Tuesday managed funds were net buyers of corn futures. Still open interest increased. This could suggest new Shorts. US farmer is not selling and end user are not buying. Today Managed funds were net sellers of corn. 2 week favorable US Midwest weather forecast limits new buying. Weekly US corn export sales are estimated near 800-1,500 mt versus 775 last week. For corn, some feel USDA may be 400-450 mil bu too high in their estimate of US 2019/20 ethanol demand. This could put IS 2019/20 corn carryout closer to 2,500 mil bu versus USDA 2,098. Some feel US farmer may plant 1.0 million less corn acres. Still drop in crop cannot offset higher carryin and talk USDA may be 400 mil bu too high in their US 2020/21 demand guess. This could put US 2020/21 carryout closer to 4,000 mil bu than USDA 3,318. Weekly US ethanol production was up from last week but still below last year. Stocks were down from last week but are still above last year. Margins improved but are still negative. Weekly US ethanol production was near 181 mil gals. Production Needs to increase to 275 to reach USDA corn use goal. US House will introduce a 3 trillion Heroes Act. It includes 16.5 billion additional direct payment to farmers. It also includes financial support for ethanol producers and livestock farmers especially hogs and poultry.
WHEAT
Wheat futures are lower. Higher US Dollar and Fed Chairman comments That US economy will slow and more stimulus will be needed weighed on Stocks and commodities. Trade was hoping that slow reopening on the US economy would slowly help US economy slowly improve. Favorable Europe and Black Sea weather plus steep discount from old crop Russia Wheat export prices to new offers strong resistance to wheat futures. One group suggested that in May, 2021 Chicago wheat futures could be In a range of 4.20-4.80. Record World 2020/21 wheat end stocks should limit upside in wheat futures. There is also a chance of scattered rain across US south plains the next 3-4 days and May 20-23. USDA estimate of World wheat demand did not show drop in demand due to virus. US House will introduce a 3 trillion Heroes Act. It includes 16.5 billion additional direct payment to farmers. It also includes financial support for livestock farmers especially hogs and poultry. On Thursday, USDA will announce next 16 billion aid to farmers that could be available in June. Weekly US wheat export sales are estimated near 250-600 mt versus 379 last week.
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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.
