Written Commentary
ADM Named To World’s Most Ethical Companies List
March 13, 2023
SOYBEANS
Mch-23 soybean did violate yesterday’s low on an intraday basis, however recovered to settle nearly $.06 off the low. After breaking out to the upside yesterday, Mch-23 soybean oil slipped back to the midpoint of the 62.00 – 64.00 range it was in the first 2 weeks of the month. It looks to have built some good support at the 62.00. I wouldn’t be surprised to see tested again soon. There were no export announcements today. The combined speculative long position in the soybean complexed had recently swelled to 350k contracts before backing off last week. MM’s continue to sit on a record long position in soybean meal. With Argentine weather improving, demand shifting to SA, combined with China’s economy slow to gain traction I’m guessing we’ll see further fund liquidation. First support in Mch-23 soybeans is $15, followed by the 50 day MA, currently $14.74 ½. China has indicated they intend to expand soybean plantings again in 2023 with hopes of expanding production to over 20 mt. While over 80% of their needs will still come from imports, their goal is to reduce imports from the US and Brazil. If achieved, I’ve got to think it would come at expense of lower corn acres. Export markets remain quiet as Brazilian soybeans are being offered at a healthy discount to US supplies, however the inverse in old crop spreads have jumped. US farmers seem reluctant to sell, while perhaps some concern harvest across north central will remain slow going. Export sales tomorrow expect 25 – 45 mil. bu. soybeans, soybean meal 0 – 300k mt, and soybean oil 0 – 15k mt.
CORN
Mch-23 closed down $.04 at $6.77 1/4, just above key support at the 100 day MA, currently $6.74 ½. Spotty rains provided some benefit to areas of Argentina yesterday. Much better coverage and precipitation totals are expected with the next system tonight through the weekend. 2 more rain events are expected over the next 10 days providing cumulative 2”– 4” rainfall totals. Over the next several weeks the market will try to access the overall impact on production as earlier planted crops have no doubt suffered irreversible yield loss.The USDA announced the sale of 195k tons (7.7 mil. bu.) of corn to Mexico. Weekly ethanol production jumped to 1,008 tbd last week, up from 943 tbd the previous week. In addition stocks fell to 23.4 mb, down from 23.8 mb the previous week, the lowest in 6 weeks. The production pace was still slightly below the pace needed to reach the current USDA corn usage forecast. Gasoline demand last week was down 2% from YA. This is the 15th consecutive week of lower demand compared to YA, however the gap has narrowed to its lowest level since late Sept-22. We had expected the USDA to lower their corn usage forecast for ethanol in last week’s WASDE report. Today’s production figures support holding steady. Futures weekly production figures will tell us if we’ve turned the corner or not. Egypt announced they purchased 50k mt of corn from Romania (likely Ukraine origin). Rumored price was $336/mt cf. The lowest offers form US were $338 and $345/mt cf. The BAGE lowered their Argentine corn production forecast 5.5 mmt to 44.5 mmt, well below the USDA’s 52 mmt forecast last Thursday. The BAGE est. came out before today’s close. Planting progress rose to 6% to 89% complete. Export sales tomorrow are expected between 15 – 35 mil. bu.
WHEAT
With the exception of nearby MGEX contracts all 3 classes of wheat closed lower in 2 sided trade. Chicago and KC both pretty much closed on their lows down $.07 – $.10. Mch-23 and May-23 MGEX both closed higher, while deferred contracts were slightly lower. Filipino importers purchased 110k tons of Australian wheat, final price not yet known. Russia’s Ag. Minister stated they expect 2022/23 gain exports to range between 55 – 60 mt with no plans to lower the countries export quota. US winter wheat areas in a drought held at 59% the past week, the lowest in 4 months and down from a 74% peak in Nov-22. Spring wheat areas in drought slipped 2% to 64%, lowest since Oct-22 and down from peak of 79%. As a major winter storm finishes moving across the nation’s midsection I’d expect the drought figures to decline again next week. No doubt drought still exists, particularly the SW Plains, however the declining numbers are a step in the right direction as the winter wheat crop moves closer to breaking dormancy. Export sales tomorrow are expected to range between 5 – 15 mil. bu.
See more market commentary here.
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.
Latest News & Market Commentary
ADM & Industry News
The Ghost in the Machine Q1 2023
March 9, 2023
ADM Opens Production Facility in Spain
February 10, 2023
