May 20, 2019 | Follow us on Twitter @TradeADMIS | Download PDF
Soybeans, soymeal, soyoil, corn and wheat traded higher. US and China trade tension weighed on US stocks and US Dollar. Crude was supported by talk of OPEC keeping production curbs but traded lower on concern over demand.
Soybeans traded higher on concern that wet US Midwest 2 week weather could eventually lower US soybean acres and production. Resistance can still be found from higher South America supplies and lower China demand. China was an active buyer of Brazil soybean last week raising concern that lack of a trade deal between US and China could permanently reduce China need for US soybeans. Weekly US soybean exports were near 18 mil bu vs 33 last year. Season to date exports are near 1,218 mil bu vs 1,677 last year. USDA next export goal is 1,775 vs 2,129 last year. Trade estimates US soybean planting pace near 18-22 pct done. Some could see US 2019 soybean acres up 1.5 mil from USDA estimate. This could produce a crop near 4,200 mil bu and a carryout near 1,030 mil bu vs USDA est of 970. July soybeans is up against the 20 day moving average near 8.40. Need further evidence of a lower US supply to push above the low in Jul and Sep near 8.60.
Corn futures traded higher. Wet US Midwest weather continues to slow corn planting and is triggering fund short covering. The gap open higher traded today was also above the 200 days moving average for the first time since June of last year. Trade estimates that between 46 and 49 pct of the US corn crop will be planted. This raises concern that 22-25 million corn acres may get planted after June 1. This could lower final acres and Yield. Thus week heaviest rains could be in NE, KS, IA, MO and C and N IL. There was some talk that final US corn acres could drop 1.5 million from USDA estimate. A 3 bpa drop In the final corn yield from USDA May guess could produce a crop near 14,500 mil bu And a carryout near 2,000 vs USDA estimate of 2,485. Trade will need to see a further Crop production to push CN much above 4.00. Farmer should be a good seller of old Crop corn above 4.00 and new crop above 4.20. Weekly US corn exports were near 32 mil bu vs 61 last year. Season to date exports are near 1,474 vs 1,430 last year. USDA goal is 2,300 vs 2,438 last year.
July Chicago wheat futures closed higher. WN tested the 100 day moving average for the first time since last August. Higher World production and disappointing demand for US wheat had weighed on prices. USDA May crop report was negative with USDA adding to already record World end stocks. Since then futures have rallied 60 cents in part due to concern that wet US weather will lower the Quality of the US 2019 SRW crop. Wheat also may have followed the higher corn trade on thoughts higher corn prices could force and increase in US wheat feeding. Today prices may have been supported by higher than expected weekly US wheat exports. Weekly US wheat exports were near 27 mil bu vs 12 last year. Season to date exports are near 866 vs 847 last year. USDA goal is 925 vs 901 last year. Exports were better than expected. Trade will be watching to see if USDA lowers this weeks rating of the US winter wheat crop due to wet weather.
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 Archer Daniels Midland Company. 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.
May 17 | Download PDF
US China Trade Concerns at the Forefront
STOCK INDEX FUTURES
U.S. stock index futures are lower breaking a three-day winning streak, as China takes a tougher stance on trade.
China’s Shanghai Composite Index fell 2.5%.
Beijing's higher tariffs on U.S. products on a $60 billion target list will go into effect on June 1, which could prompt Washington to go ahead with tariffs on an additional $300 billion worth of Chinese goods.
The 9:00 central time May consumer sentiment index is expected to be 97.5 and the 9:00 April leading indicators is anticipated to be up .3%.
As the U.S. earnings season winds down, of the 457 S&P 500 companies reporting approximately 75% of them beat profit expectations, according to Reuters data.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks are coming and will be the dominant fundamental that supports stock index futures in the long term. But, first we need to get past the U.S.-China trade hurdle.
The euro currency is steady, although there are concerns about upcoming European parliamentary elections.
The British pound is down for the sixth day in a row and to a four month low after cross-party Brexit talks between the Conservatives and Labour collapsed.
The Japanese yen is higher, attracting safe-haven buying due to concerns over trade tensions and impending European elections.
The offshore Chinese yuan weakened to as low as 6.9497 against the dollar, which is its weakest level since November 30.
INTEREST RATE MARKET FUTURES
U.S. Treasury bond futures advanced and remain near a seven week high, as flight to quality buying continues to underpin the interest rate futures market.
Federal Reserve speakers today are Federal Reserve Board of Governors Vice Chairman Richard Clarida at 9:00, New York Federal Reserve Bank President John Williams at 10:15, Richard Clarida again at 12:40 and John Williams again at 1:00.
Financial futures markets are predicting there is a 77% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its December 11 policy meeting, which compares to 73% yesterday.
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 Archer Daniels Midland Company. 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.
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