Quite the week. US Speaker of the House invaded Taiwan triggering expected negative response by China. Ukraine war continues but a few Ukraine grain ships are beginning to ship. US Midwest was mostly warm and dry but analyst estimate USDA August soybean yield unchanged from July. Some are increasing US 2021/23 and 2022/23 soybean carryout slightly higher due to lower exports but China finally returned to buy US 2022/23 soybeans. Once a frontal system mid-week next week passes through the Midwest a stronger ridge of high pressure could build into the Great Plains and the Gulf of Mexico moisture may close as a moisture source for the WCB. The drier air following the frontal system may get trapped over a part of the central and interior southern Plains and the west-central and southwestern Corn Belt where hotter temperatures and limited rain could bring accelerated drying and a new run at crop stress. There remains limited interest by Managed funds to buy commodities due to threat of recession.
Wax off wax on. CU remains in a 5.80-6.30 trading range. Fact US farmer is not selling Corn and dry weather in EU helps support corn futures on breaks. Lack of heat and dry stress over much of the US Midwest and fact Managed funds have liquidated their large net corn long since May offers resistance. Ukraine war continues but a few Ukraine grain ships are beginning to ship. Once a frontal system mid-week next week passes through the Midwest a stronger ridge of high pressure could build into the Great Plains and the Gulf of Mexico moisture may close as a moisture source for the WCB. The drier air following the frontal system may get trapped over a part of the C and S Plains and the WC and SW Corn Belt where hotter temperatures and limited rain could bring net drying and some crop stress.
Wheat futures just can’t rally. Today’s US jobs data increased more jobs than expected. This rallied the US Dollar which laid the foundation for US Fed to raise interest rates more than some had suggested. This could reduce demand for commodities. Crude has loss 9 pct in value just this week. One vessel of already loaded Ukraine corn was shipped. 3 more shipped today. Most of the loaded unshipped vessels are Corn but more empty vessels are going into Ukraine ports to load grain. Still some doubt Ukraine will export the 19 mmt of combined corn and wheat 2022/23 exports USDA is forecasting. Some also feel EU and Russia may not ship the 75 mmt of wheat USDA is forecasting. Lower EU corn crop could increase EU wheat feeding and logistic, floating export tax and freight surcharges may slow Russia wheat exports. Matif wheat futures are rallying vs US due to increase demand. India may eliminate 40 pct wheat import duty. India domestic wheat price is record high. USDA is est India Wheat exports at 6.5 mmt.
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.