Written Commentary
SOYBEANS
The soybean complex closed mixed with soybeans down $.26 – $.29, soybean meal down $7 – $13, while soybean oil surged 90 – 105. An inside day for July-23 beans. Nov-23 soybeans rebounded off support near $12.83 ½, the 38% retracement between the May low and the June high. Nov-23 settled just above its 100 day MA at $12.94. The July/Nov spread made a new high for the move to $2.18 before backing up into the close. July-23 soybean oil surged to its highest close in nearly 4 months. Spot board crush margins jumped $.21 today to $.67 bu. while soybean oil product valued surged to 42.6%, a 6 month high. Soybean ratings slipped 3% to 51% G/E, in line with expectations. The soybean CC index slipped to 79.0, the lowest for late June since at least 2000, even below the 79.2 in 2012. The lowest rated states are MI, MO, and IL. History has shown that with favorable weather here forward the crop can recover and reach or possibly exceed the current USDA forecast. Abiove raised their Brazilian production forecast 1 mmt to 156 mmt, matching the current USDA forecast. They also raised their export forecast 1.3 mmt to 97 mmt, crush up .2 mmt to 53.2 mmt, and meal exports .5 mmt to 21.9 mmt. USDA forecasts are 93 mmt exports, 53.5 mmt crush, and 21.65 meal exports. Stats Canada is expected to raise canola plantings .2 mil. acres to 21.8 mil. in tomorrow’s 7:30 AM CST report.
CORN
Prices were down $.14 – $.26 today with new crop leading the declines. The steady to higher start overnight following the larger than expected drop in crop ratings quickly sold off as the market focus shifted to improved weather forecasts. 5 day precipitation maps show 1.5-2” rains for much of NE, east central IL, along with much of IN and southern OH. Other drought stricken areas likely to see .75-1.25”. Lighter amounts across the north and deep south. Temperatures in the upper 90’s to low 100’s, which so far have been confined to Texas, are expected to expand north and east into the southern corn belt by the middle part of this week for 2-3 days before the ridge sinks and slides west. Both the NWS 6-10 and 8-14 day forecasts offer normal to above normal precipitations for much of the nation’s midsection. July/Dec spread has rallied $.28 the past 2 sessions. An inside day for July-23 corn with 100 day MA support is at $6.19 ¼, just below yesterday’s low. Dec-23 corn closed near $5.60 support, the midpoint between the May low and June high. Corn ratings slipped 5% to 50% G/E, while expectations were for a 3% decline. The corn CC index slipped to 78.9, the lowest for late June since 2012. MI, MO, and IL are also the lowest rated corn states. If weather were mostly favorable here forward best guess on top-end yield would be 177 – 179 bpa. With a 171 yield, production would fall 885 mil. bu. to 14.380 bil. (assuming current USDA acres). South Africa est. this year’s crop at 16.35 mmt, up 5.7% from YA.
WHEAT
Prices were sharply lower with all 3 classes with Chicago down $.38 – $.40, while KC and Chicago were $.26 – $.29 lower. July-23 Chicago closed very near its 100 day MA of $6.85 ¾. Morocco’s state grain buyer is seeking 2.5 mmt of milling wheat for July thru Sept shipment. Ukraine shipped only 358k tons of agricultural crops thru the Black Sea last week, down 18% from the previous week. Today the Ukraine Sea port authority stated they are preparing to export grain exclusively thru Danube River ports on anticipation of the closure of the BSGI once the current agreement ends in 3 weeks. Winter wheat ratings improved another 2% in G/E to 40%. The WW CC index rose for the 7th consecutive week to 75.8, vs. 71.8 YA. My model is forecasting an average yield of closer to 48 bpa, just above the 47 bpa yield from YA and well above the USDA forecast of 44.9 bpa in June. Harvest advanced only 9% to 24% complete, vs. 39% YA and 5-year Ave. of 33%. Spring wheat rating slipped 1% to 50% G/E, surprising given the widespread rains in the Northern plains in the past week. Look for improved ratings next week. The spring wheat CC index slipped to 78.7, the lowest since 2017. Stats Canada all wheat acres are expected to slip to 26.5 mil. down .5 mil. from March intentions.
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.
