Written Commentary
MORNING AG OUTLOOK
Sharply lower wheat prices has triggered a Sea of Red across the Ag space this AM. Wheat prices across all 3 classes fell to new lows for the week following comments from Russian Pres. Putin that there was a chance for a peace agreement to end the war with Ukraine. Turkey’s President Erdogan on Wednesday said, “a mechanism is needed to permanently ensure the safety of commercial maritime transport in the Black Sea before a grain crisis escalates.” Tomorrow afternoon the CFTC will likely show record length by Money managers in corn, KC wheat and possibly soybeans. Energy prices were mostly higher with little fresh news from the Persian Gulf. Oct-26 WTI crude is up $1.75 per barrel at 92.75 while setting a new contract high. Spot RBOB was steady to higher while HO is steady to lower. lon. Another round of storms are riding up and around the high pressure ridge parked across the nation’s midsection. Rains will continue to favor the N. Midwest, Great Lakes region and the Gulf Coast with the central and southern Midwest remaining hot/dry, pushing crops toward maturity. Normal to below normal temperatures for S. Brazil and Argentina, while above normal temperatures across central and northern growing regions of Brazil. Scattered rains for central and southern Brazil while dry elsewhere. Much of Europe to remain hot with scattered rains in the East. Much of Ukraine to hold in a dryer than normal pattern. The US $$ is sharply lower, slipping to a new low for the week. US equity markets are mixed.
Corn:
Dec-26 futures are $.14 lower at $5.29 ½, trading to a new low for the week. We estimate MM’s are holding a record large, long position at 491k contracts. O.I. increased 13k contracts in yesterday’s trade. IMEA forecasts the 2nd crop corn in Mato Grosso, Brazil’s largest producing state, at only 53.7 mmt in 2026/27, down 7.5% from YA as El Nino is likely to reduce yields. Allendale is forecasting US production at 15.833 bil. bu. with an average yield of 178.7 bpa, down 180 mil. bu. from the USDA forecast in August. Export sales are expected to range from 12-65 mil. bu. Prices are overbought and likely due for a correction with harvest across the heart of the Midwest about to kick in.
Soybeans:
Nov-26 beans are $.12 lower at $12.98. Oct-26 meal is down $2.70 at $340.20 while Oct-26 oil is off just over $.01 lb. at 69.50 while violating 50 & 100-day MA support. Crush margins are off another $.05 ½ at $2.14 ½ bu. We’ve got the combined long position in the soybean complex at just over 508k contracts, just above the all-time high from May-26 at 502k. Allendale is forecasting US production at 4.515 bil. bu. with an average yield of 52.6 bpa, down only 4 mil. from the USDA forecast in August. Export sales are expected to range from 45-95 mil. bu. of beans, 125-975k tons of meal and -10-10k tons of oil. Poor finishing weather in the US combined with Chinese demand will likely limit a correction to the $12.50-$12.75 range basis Nov-26 futures until we know more on US 2026 production. Chinese leader Xi to visit Washington DC in 3 weeks. USDA production and WASDE updates next Fri. the 11th.
Wheat:
Prices range from $.20 to $.30 lower. CGO Dec-26 is down $.29 ½ at $7.44 ½, KC Dec-26 is $.25 ½ lower at $8.09 while Dec-26 MIAX is $.21 lower at $7.61. The level of the selloff overnight illustrates just how sensitive prices are to the logistical issues preventing the flow of wheat from the Black Sea region. Asian importers have been forced to turn to Australia and Argentina in recent weeks to replace delayed cargoes from the Black Sea, often paying $50/mt CF more. Germany’s Ag Ministry estimates this year’s grain harvest will be off 7.3% from YA at 37.4 mmt. All wheat production is expected to reach only 20.8 mmt, down 10% YOY. Wire services are reporting Saudi Arabia issued a tender for 535k mt of wheat for Nov/Dec shipment. US export sales are expected to range from 12-24 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.
