Written Commentary
MORNING AG OUTLOOK
Lower trade across most of the Ag space ahead of this AM’s export sales and tomorrow’s USDA production and WASDE data. Rain this week in the NW corn belt and N. Plains brought some relief ahead of the expected temperature surge this weekend into next week. Week 2 of the outlook shifts the high pressure ridge further west limiting yield threatening heat to the NW plains. The past 24 hours showed scattered, and in some cases healthy rain, across IA, eastern NE and KS along with S. MN and WI. Over the next 5 days 1-2” of rain is expected across the SE third of the corn and soybean belt with lighter amounts and coverage in the far WCB. Only scattered rains for the N. and S. Plains while the N. Midwest will also see a break from the recent heavy rains. Energy prices are steady to higher as tensions in the Middle East remain elevated. Spot WTI crude oil is up $.60 per barrel near $74.15 while holding within yesterday’s range. Spot RBOB is up $.03 a gallon while HO is steady. Markets will remain sensitive to Chinese demand awaiting confirmation of addition sales. While scattered rains are expected in France over the next week, much above normal temperatures to remain intact keeping drought relief to a minimum. Seasonably warm temperatures in SA with rains limited to S. Brazil. The US $$ is slightly higher in 2-sided trade while US equity markets are mixed.
Corn:
Sept-26 and Dec-26 are both $.05 lower at $4.30 and $4.51 ¼ respectively. $4.25 is the midpoint of the range for Sept-26 futures over the past 2 weeks. Yesterday Dec-26 topped out just shy of $4.66, its 50% Fibonacci retracement between the May high and the June low. A Reuters survey shows traders expect lower corn stocks for both old and new crop in tomorrow’s USDA WASDE update. Little change is expected for this year’s production. With US crop ratings currently average, I do not expect the USDA to come off their 183 bpa trendline yield. Export sales are expected to range from 48-78 mil. bu. for both crop years combined. Yesterday’s EIA ethanol production was below the pace needed to reach the USDA corn usage est. for a 12th consecutive week. The BAGE kept their Argentine production forecast unchanged at 64 mmt, vs. USDA at 61 mmt, while reporting harvest has reached 56%. The Rosario Grain Exchange held their production forecast unchanged 68 mmt.
Soybeans:
Aug-26 beans are down $.06 at $11.87 ¼ while Nov-26 is $.04 ¼ lower at $11.88. Both Aug-26 and Nov-26 stalled after trading back above the $12 level yesterday. Aug-26 meal is down $1.10 at $311.20 while holding within yesterday’s range. Aug-26 oil is up 26 points at 71.11 trading to a fresh 3-week high. Crush margins (Aug-26) rebounded $.06 ½ to $2.29 ½ bu. with bean oil PV holding above 53%. US FOB offers at the Gulf remain at a $.10-$.20 per bu. premium over Brazilian offers out to Nov-26. With D4 RIN’s near $2.50, the B/E price for soybean oil for a California RD manufacturer is near $.90 lbs. The Reuters poll shows traders expect very little change to old crop soybean stocks while new crop is expected to jump 20 mil. bu. to 330 mil. due to higher acres. Like corn, I do not expect the USDA to come off their 53 bpa trendline yield forecast. The BEGE kept their Argentine production forecast unchanged at 50.1 mmt, in line with the USDA. The Rosario Grain Exchange held their production forecast unchanged at 51.5 mmt. Export sales are expected to range from 8-36 mil. bu. for beans, 250-600k tons of meal, and -5-10k tons of oil.
Wheat:
Prices are steady to $.02 lower in 2-sided trade. CGO Sept-26 is down $.00 ¾ at $6.07, KC Sept-26 is $.01 ¾ lower at $6.43 ½, while MIAX Sept is unchanged at $6.30 ¾. The Reuters survey shows traders expect US 26/27 wheat stocks to slip 30 mil. bu. to 714 mil. All wheat production is expected to fall 18 mil. to 1.525 bil due to lower winter wheat. The Ave. WW production forecast at 1.001 bil is down 29 mil. from June. The BAGE reports Argentine plantings have reached 88%. Export sales are expected to land between 10-20 mil. bu.
Interested in more futures markets? Explore our Market Dashboards 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.
