Written Commentary
SOYBEANS
The soybean complex recovered to close mixed. Soybeans finished anywhere from up $.03 in spot July to down $.07 in new crop. Similar story in meal with July up $1 while new crop was down $1 – $2. Soybean oil was steady. Much of the recovery was being attributed to China have bought a few cargoes of Brazilian soybeans taking advantage of the recent weakness. Yesterday’s close in spot July-23 soybeans at $12.96 ½, was at the midpoint between the Covid low in April-20 and the summer high in 2022 on the weekly chart. Soybean plantings reached 82% as of this past Sunday, in line with expectations and well above both YA and the 5-year Ave. Emergence has reached 56% vs. only 36% YA. The EIA reported yesterday the nation’s biodiesel and renewable diesel capacity grew only 42 mil. gallons to 5.365 bil. This was the lowest rate of capacity expansion in 5 months. Total soybean oil used in biodiesel production expanded to 953 mil. lbs. up 5% from both Feb-23 and Mch-22, and was the 2nd highest monthly usage figure ever. In the first 6 months of the Oct-22 thru Sept-23 MY soybean oil usage has reached 5.538 bil. lbs., up 10% from YA, however slightly below the USDA forecast of up 12%. Hard to argue for any change to the current USDA oil usage forecast of 11.6 bil. lbs. in next Friday’s WASDE report. Wire services are reporting that shipping data from Brazil shows 120k tons (4.5 mil. bu.) of soybeans are headed for the US in early June. This likely represents trade that was previously announced earlier this Spring. Census crush from April is scheduled after tomorrow’s close of trade. Expectations are for 185 mil. bu. with a range of est. from 182 – 186 mil. Soybean oil stocks are expected to have risen to 2.5 bil. lbs. up from 2.39 bil. lbs. in Mch-23. Estimates range from 2.40 – 2.55 bil. lbs.
CORN
Prices finished steady in spot July while new crop contracts were down $.03 – $.04. The low in July-23 at $5.77 ½ held just above the midpoint of this month’s range. The recovery was likely just a technical bounce into month end as selling dried up. The overnight weakness was a combination of the same bearish factors, weak demand, increased production estimates from Brazil, US wheat imports, Russia flooding global markets with cheap wheat, while US plantings near completion. Markets continue to place growing dryness in much of the nation’s midsection on the back burn while believing (or at least hoping) a more favorable weather pattern will develop by mid-June. Contributing to the bearish climate was a weaker than expected Chinese PMI figure. Planting progress has reached 92%, in line with expectations and just above the YA pace and 5-year Ave. at 84%. ND planting progress surged 40% to 72% complete, nearly reaching it 5-year average of 73%. Ukraine’s Ag. Ministry reports corn exports since last July-22 have reached 26.4 mmt, up 20.5% YOY. The USDA has 25.5 mmt in exports penciled in their 22/23 balance sheet which ends in 1 month. The weekly ethanol production report is delayed until tomorrow.
WHEAT
Prices recovered to close mixed. KC closed up $.05 – $.06, Chicago was $.02 – $.03 higher, while MGEX was still down $.10 – $.13. Winter wheat conditions improved 3% to 34% G/E above the 29% from YA. Spring wheat plantings advanced to 85%, nearly reaching the historical average of 86%. South Korean feed buyers have reportedly purchased just over 100k of optional origin feed wheat for Aug. shipment in recent days, prices reported between $261 and $264/mt CF.
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.
