Ag Market View for June 23.22
Soybeans, soymeal, soyoil ended lower. 2 week US Midwest forecast calls for below normal rains but normal temps. Cash soybean values remain strong and over delivery prices. Inflation and recession concerns and higher US interest rates could slow commodity demand. Concern over China and EU economy could also slow their import demand. Some feel China’s financial system suggest it may not be consumption-led, or even export-led, but lending-led. The best guess is that as of calendar year 2022, total outstanding corporate China debt has reached 350% of GDP, or some $58 trillion. Some feel July futures traded down to key strike prices and option expiration is tomorrow. US 30 day weather outlook suggest dry with moderate temps. USDA est US crop at 68 pct G/E. IL is rated 66 G/E. Some est yield near 59 vs 60 ly. IA is rated 80 G/E. Some est yield near 59 vs 62 ly.
Corn futures fell to 4 month lows on both old and new crop on ongoing rain across much of France and on the back of the ongoing risk-off and sell everything mentality that has gripped the commodities world. Fundamentally it is difficult to justify the severity of the break with the N Hemisphere corn crops still to go through their most sensitive crop development stage. Some cite inflation and the macros as the reason for the sell-off, and while inflation is normally bullish the commodities. The move over the last 3 months has been such that a correction was probably needed. Some fear however grain market may be more focused on geo-politics, and the global food and energy demand, resolution of Ukraine war and building tension between China and US/Taiwan as negative to demand. These are the key macros of the World economy and price discovery. US 30 day weather outlook suggest dry with moderate temps. Parts of IL, IN and OH topsoil are drying. USDA est US crop at 70 pct G/E. IL is rated 71 G/E. Some est yield near 205 vs 202 ly. IA is rated 83 G/E. Some est yield near 201 vs 205 ly. Next 30 day US weather could be key for next 12 month prices.
Wheat futures traded sharply lower. WU ended near 9.49 with overnight high near 9.87. KWU ended near 10.12 with overnight high near 10.44. MWU ended near 10.79 with overnight high near 11.05. Bulls are fighting USDA est of 40 mmt Russian wheat exports, Ukraine ‘analyst’ est of 41 mmt Ukraine exports wheat and corn, that lower prices ration demand in the face of record low major exporters stocks/use ratios, an 80 mmt Indian wheat crop will allow 6 mmt of exports with zero imports and 104 mmt domestic demand. US Fed goal to raise interest rates until inflation drops and lack of Increase in US oil production will keep Crude oil futures from rallying then all is well. Higher US rates is helping US Dollar which may be limiting buying US wheat for export. Wheat futures are back to near levels before Russia invasion of Ukraine.
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.