Written Commentary
by Steve Freed,
Post USDA report day. Grains are lower. SN is down 1 cent and near 8.51. CN is down 1 cent and near 3.20. WN is down 4 cents and near 5.10. US stocks are higher. US Dollar is lower.
USDA May US and World supply and demand gave little optimism for the bulls. In fact, USDA conservative approach to US ethanol demand and impact the virus might have on global food, fuel and feed demand could open the door for more demand downward revision and higher carryouts. This suggest rallies may be limited to weather events.
USDA showed China soybean import demand to increase 150 mil bu. USDA though increased US 2020/21 soybean exports 375 mil bu but at the same time increased South America 2020/21 crops 375 mil bu. This does not add up and could suggest USD may be too optimistic about increase in US 2020/21 soybean export outlook. Some are forecasting US 2020/21 soybean carryout closer to 570 mil bu versus USDA 405.This includes an increase in final US acres by 1.5 million and a crop 120 mil bu larger than USDA.
USDA US 2019/20 corn domestic demand may be too high. Some feel US 2019/20 corn ethanol demand may be 450 mil bu too high. USDA is also forecasting a 400 mil bu increase in US 2020/21 corn exports. This may also be optimistic given forecast of higher Black Sea and South America supplies. Some could see final US 2020 corn acres down I million but a crop 170 mil bu lower could be offset by lower feed us and exports.US 7 day forecast has rains for MO and east Midwest. Maps hint of rains May 20-23 for south plains and much of the Midwest.
USDA forecast of record World wheat stocks should limit the upside in wheat prices. USDA also did not show any impact to World wheat demand due to the virus and some financial concerns for North Africa byers. Final Russia crop could be higher than USDA first guess.
On Tuesday, managed funds sold 2,000 SRW Wheat, bought 15,000 corn, net sold 1,000 soybeans, bought 2,000 soymeal and net sold 2,000 soyoil. We estimate Managed funds are net short 2,000SRW Wheat; net short 170,000 Corn; net long 25,000 in Soybeans; net short 10,000 lots of Soymeal, and; net short 7,000 Soyoil.
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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.
