Written Commentary
CORN
Prices were $.01 higher while spreads eased a bit. Both July-26 and Dec-26 held within yesterday’s range. The USDA announced flash sales of 494k mt (19.5 mil. bu.) of corn to Mexico and 110k mt (4.3 mil. bu.) to an unknown buyer. Of the nearly 24 mil. bu. sold, roughly 11 mil. was for 25/26 MY with 23 mil. for 26/27. Finally starting to pile up some new crop sales. Prospects for sales to China have raised the price floor for corn while favorable weather limits the upside. I look for July-26 to hold in a $4.50-$4.90 range. The BAGE raised their Argentine production forecast 3 mmt to 64 mmt, once again forging a gap with the USDA forecast at 59 mmt. Argentine harvest advanced 1% to 33%, near its historical average. Look for Tues. crop progress report to show 85-90% of the US corn planted while initial crop ratings are expected to be above their historical norm. While it would not be unprecedented, December corn has peaked in May only 11% of the time in the last 46 years. Food for thought, the average growing season high (April thru expiration) for December corn is 25% above the Q1 low. With this year’s low of $4.45 ¼ would suggest an average peak at $5.56 ½. May 1st cattle on feed at 11.584 mil. head were up 2.0% from YA, slightly above the Ave. est. Placements were up 6% vs. expectations for up 3%. Marketing at down 10% were in line with expectations.
SOYBEANS
Prices were slightly higher across the complex with beans up $.01-$.02, meal was $1-$3 higher while oil was up 10 points. Perhaps a bit of a relief bounce ahead of the 3 day Memorial Day weekend. Spreads were also slighter stronger across the complex. July-26 beans once again bounced off its 50-day MA while holding below yesterday’s high. Crush margins have rebounded $.07 to $3.47 ½ bu. while bean oil PV slipped to 52.7%. The USDA announced a flash sale of 252k mt of meal to an unknown buyer. 117k mt was for 25/26 MY with 135k for 26/27. With crush margins holding near record highs to fuel expanded biofuel production along with the potential for Chinese demand returning to pre-tariff levels has raised the price floor. At the moment favorable weather limits the upside. Near term I look for July to hold between $11.75-$12.25. The BAGE raised their Argentine production forecast 1.5 mmt to 50.1 mmt, above the USDA est. of 48 mmt. Harvest continues to roll, up another 17% in the past week to 75% complete. Biodiesel blending credits (D4 RIN’s) totaled 690 mil. in April, up 5.7% from March and are the highest since Dec-24, suggesting another boost in green diesel production and likely higher bean oil usage. Biodiesel production and feedstocks usage data from March is to be released by the EIA next Friday. November soybeans have peaked in May only 4 times in the past 46 years. Ironically the average growing season high for November soybeans is also 25% above the Q1 low suggesting an average peak this year at $13.20.
WHEAT
The weakling in the Ag. space as priced ranged from $.01-$.05 lower. CGO July-26 was down $.01 ¼ at $6.46 ¼, KC July-26 was off $.05 at $6.82, while MIAX July-26 was $.00 ¾ lower at $6.89 ½. Support for CGO July-26 is at $6.31 ½ while support for KC July-26 is at this month’s low of $6.64. The higher start this week quickly stalled as traders feel US wheat is least likely to benefit from Chinese demand with US prices largely uncompetitive in the global marketplace. Starting in June, Argentina will cut their export tax on wheat shipments to 5.5% from 7.5%. Russia’s Ag. Ministry stated their port capacity will grow to 100 mmt annually by 2030, up from the current 85 mmt. SovEcon forecasts Ukraine will export 21.2 mmt of wheat in the 26/27 MY, well above the 13.2 mmt in 25/26. The USDA is forecasting sales in 26/27 at only 13 mmt.
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.
