Report Day, Grain Futures Are Lower


USDA report day. Grains are lower. SN is down 14 cents and near 15.92. SX is near 14.60. SMN is near 399.1. BON is near 82.09. CN is down 4 cents and near 7.84. CZ is unch and near 7.35. WN is down 3 cents and near 11.09. KWN is down 2 cents and near 11.97. MWN is down 3 cents and near 12.52.

US stocks are lower. Crypto currencies are sharply lower. Crude is lower. Gold, silver, copper, cotton, coffee, cocoa, and sugar are lower.  US Dollar is higher.

For the 6 straight day US stocks are lower. Concern inflation and higher US interest rates will push US economy into a recession offers resistance to stocks. Crypto currencies are also lower on lack of confidence as a hedge against inflation.

Weakening China economy is bad news for commodity exporters such as Brazil, Chile or Australia that supply China with oil, copper and iron ore. It is bad news for manufacturing powerhouses such as Germany, Taiwan and South Korea that rely on China as a huge market for machinery, cars and semiconductors, as well as a critical link in world-wide supply chains for their companies.

And it is bad news for the U.S., where higher inflation is squeezing household budgets. Federal Reserve Chairman Powell warned last week that, alongside the war in Ukraine, China’s economic woes could aggravate inflationary pressures in the U.S. if they prevent the healing of supply chains that is essential to help cool inflation.

In 2021 China accounted for 18.1% of global gross domestic product and just behind the U.S. at 23.9% but ahead of the 27 members of the European Union at 17.8%. It accounts for almost a third of global manufacturing output, according to United Nations data from 2020.

USDA could keep most US and World balance sheets unchanged today. USDA should lower SA soybean crops 5 mmt. Key could be estimate of US 2022/23 soybean exports. Some estimate near 2,750 vs USDA Outlook at 2,150.

USDA could also keep most US and World corn balance sheets unchanged today. Some doubt USDA will drop US corn yield from 181 vs crop watchers 177. USDA has used their outlook corn yield on the May report every year since 2014. Trade will see how USDA handles Ukraine 2022/23 corn exports. US Midwest weather dry but rains return this weekend and next week.

USDA could lower US 2021/22 wheat exports and raise carryout.  Will see how USDA handles potential drop in Black Sea wheat exports due to Ukraine war. Major World wheat buyers have little forward coverage. US bakers are also short wheat with light coverage.  Global wheat weather is still supportive to wheat futures.

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

Explore the latest edition of The Ghost in the Machine

Explore Now