Ag Market View for Oct 20th
Soybean futures ended higher. SX has now rallied for USDA crop report low of 11.84 to todays high of 12.49. Soybean bears are searching for solid reason for bounce in futures. SX tested first resistance near 12.43 and 20 day moving average. Lack of follow through selling near recent lows after the bearish USDA Sep reports may have triggered some short covering into buy stops. Funds may have been too short soymeal given some domestic logistics issues and firming basis. Talk of increase US soyoil use for green fuel and new highs for rapeseed oil suggest funds may not be long enough soyoil futures. Higher product values is helping soybean futures. Interesting that one of biggest bulls in the market would be a seller of SX near 12.50. Weekly US soybean export sales are est near 1,500-2,500 mt vs 1,148 last week.
Corn futures traded higher and near key resistance. Corn futures have now rallied 27 cents off the October 13 low. Some feel positive ethanol margins and fact US pipeline may not get filled before the end of harvest may be behind the rally. There was some talk that US farmers may have increase cash sales today. Weekly US ethanol production was up 6 pct from last week and 20 pct from last year. Stocks were up 1 pct from last week and 2 pct from last year. Margins remain positive. Trade estimates weekly US corn export sales near 700-1,400 mt vs 1,039 last week. US commit is ahead of last year but China and other buyers need to increase new sales. Argentina export corn prices are a premium to US and EU needs to import corn. Fact China may limit fertilizer exports could lower US 2022 corn planted acres and yield. CZ has been in an uptrend since the July low near 4.63. Some link this to talk of lower US corn yields. CZ was near 5.26 before USDA August report and dropped to 4.88 on Sep 10. CZ then rallied to Oct 4 high near 5.38 before dropping to a low on Oct 13 of 5.08. Talk of increase demand has CZ testing 5.35 today.
Wheat futures ended higher. Lower US Dollar and higher commodity price action offered support. Wheat is wheat. MWZ moon shot continues and is testing 9.94. Some link this to record low World milling wheat supplies. Talk of lower EU and Russia exports is also supportive. WZ is trading above Tuesday high. KWZ is testing 7.60 resistance. Some feel wheat futures may be overbought and that US domestic basis could begin to slip. Domestic flour buyers need to finish OND coverage. Q1, 2022 coverage near 40 pct. Key is US 2022 weather. Middle East and N Africa buyers are short. Will be limited new exports from Canada. EU wheat export pace will have to slow. Need EU prices to rally to slow exports. Russia is front loading exports before Jan 1 export quotas. Russia export prices continue to firm and the export tax increase.
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.