Written Commentary
CORN
Prices broke out to the upside intraday before closing $.03 ½ – $.05 ½ higher. Spreads were mostly firm. While energy prices were lower today, I’d argue that corn prices have not kept pace with the surge in energy the past few months. Markets also injected weather premium. Next resistance for July-26 is the March high at $4.87 ½ while resistance for Dec-26 is at its contract high of $5.12 ½. The USDA announced a flash sale of 148 mmt (6 mil. bu.) to an unknown buyer, half for 25/26 MY and half for 26/27. This afternoon’s CFTC update is likely to show the MM long position back above 200k contracts. The BAGE kept their Argentine production forecast unchanged at 61 mmt, well above the USDA forecast of 52 mmt. Harvest has reached 28%. The US House passed a farm bill yesterday that didn’t include the year-round sale of E-15. They are expected to vote on a standalone E-15 bill on May 13th. Corn used for ethanol production in Mch-26 at 474 mil. bu. was up 10% from Feb-26 and up 4.8% YOY. In the first 7 months of the 25/26 MY usage has reached 3.225 bil. up .6% from YA vs. USDA forecast of up 3%. To reach the USDA forecast April thru Aug. usage will need to reach 475 mil. bu. month, up 6.24% from YA.
SOYBEANS
Prices were mostly higher with beans up $.06-$.10 led by new crop, meal was little changed while oil closed 55-65 points higher. Inside trade for July-26 beans while establishing its 1st close above $12 in nearly 2 months. Nov-26 traded to a new 2-year high. New contracts highs in bean oil with the spot contract soaring to a fresh 3 ½ year high. S&P Global calculates that under the current tax and D4 RIN value structure the break-even price for bean oil in RD production is $.89 lb. Support for July-26 meal is at its 100-day MA at $314.70. Spot board crush margins did pull back $.06 today to $3.61 bu. while bean oil PV closed at a record high of 54.4%. Yesterday’s EIA data showed bean oil usage for biofuel production jumped 8% in Feb-26 to 1.058 bil. lbs., however still well below the 1.310 bil. needed to reach the current USDA forecast. Bean oil represented 44.3% of feedstock usage, up from 42.6% Jan-26 and the highest since July-23. D4 RIN generation in Mch-26 was up 35% over Feb-26, suggesting a sizeable bump up in biodiesel and RD production, and likely bean oil usage. The BAGE held their Argentine production forecast unchanged at 48.6 mmt, vs. the USDA 48 mmt forecast. Harvest advanced 8% to 18%. Look for the CFTC to report a new record MM long position in soybean oil and across the soybean complex combined. Mch-26 crush at 227 mil. bu. was below expectations of 231 mil. Cumulative crush over the 1st 7 months of the MY at 1.561 bil. bu. is up 8.5% from YA, vs. the USDA forecast of up 6.8%.
WHEAT
Prices ranged from $.02 lower in MIAX to $.01 higher in CGO and KC. All 3 classes experienced 2-sided trade. CGO July-26 was up $.01 at $6.37 ¾, KC July-26 was $.01 higher at $6.94 ¾ while MIAX July-26 was $.01 ¾ lower at $7.04. Winter wheat acres in drought fell 1% to 69% while Spring wheat acres in drought held steady at 18%. Export sales held up better than expected yesterday at 14 mil. bu. Old crop commitments at 907 mil. bu. are up 16% from YA, vs. the USDA forecast of up 9%.
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.
