Written Commentary
CORN
Prices were $.03-$.04 higher closing near session highs while drawing support from higher wheat, soybean and energy prices. Spreads were mixed and little changed. With 100+ degree heat this week limited to the northern and SW Plains, the market may be sensing its impact on the US crop may be limited. Lack of rain for the WCB is still problematic. Despite weak export sales this week, YTD commitments are up 25% YOY vs. the USDA forecast up 16%. I sense we’ll see another 25-50 mil. bu. of demand shifted from usage for ethanol to higher exports in Aug-26 WASDE update. The BAGE kept their Argentine production forecast unchanged at 64 mmt vs. the USDA est. of 63 mmt. Harvest has reached 62%, well below YA pace of 80%. France’s Ag. Ministry reports corn ratings fell another 6% to 41% G/E, well below the 72% YA. Look for US ratings to slip 3-4% on Monday.
SOYBEANS
Prices across the complex were mostly higher with soybeans up $.06-$.09 closing near session highs, meal was $3-$4 lower while oil was up over $.02 lb. Spreads firmed across the complex. Aug-26 and Nov-26 both closed back above $12. Resistance is at this week’s highs of $12.08 ¾ and $12.07 ¼ for Aug and Nov respectively. Inside trade for Aug-26 meal. Aug-26 oil traded above $.75 lb. for the first time in 6 weeks. Crush margins have surged $.11 to $3.23 bu. with bean oil PV jumping to 53.9%. EPA data showed D4 RIN’s generated in June reached 839 mil. up 14% from May suggesting a surge in bio and renewable diesel production, and likely surge in soybean oil usage. This was the highest D4 RIN generation since Dec-24. The USDA announced flash sales totaling 706.6k mt (26 mil. bu.). 340k were to China, 256.6k to Mexico while 110k to unknown. Cash sources suggest China likely bought another 3-5 cargoes today. US Gulf FOB offers are holding $.05-$.20 over Brazilian offers thru Nov. Argentine farmers have priced only 28% of this year’s crop, well below the historical average of 35% by mid-July. If US sales to China continue to stack up the market will have little wiggle room for US yields slipping below 53 bpa. Look for US ratings to slip 1-2% on Monday. August weather will be crucial.
WHEAT
Prices range from $.08-$.15 higher across the 3 classes, shrugging off early weakness. Supply disruptions from Russia, the world’s largest exporter of wheat, and Ukraine coupled with lower production in the US and EU will likely keep the path of least resistance higher with volatility elevated. Russia’s Ag. Minister tried to reassure farmers they will have enough fuel they need to harvest their grain on time. Fuel shortages have occurred since Ukrainian attacks on their energy infrastructure. After modest selling yesterday, we’ve got speculative traders still short 33k contracts in CGO futures (SRW). The BAGE reports Argentine plantings have reached 92%. Soft wheat harvest in France has reached 92% as of early this week, well ahead of its historical average. Since 2010, final US winter wheat production was below the July USDA forecast 8 times, above it 7 times while unchanged once. 2012 was the only year where production was cut in both June and July, like this year. Final production that year was 40 mil. bu. below the July forecast.
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.
