Written Commentary
Soybeans, soymeal, soyoil, corn and wheat all traded higher. Early lower trade uncovered new fund buying. Word that China is buying US new crop corn is supportive. Funds worried about inflation and US summer weather. US stocks were higher. US Dollar was lower after lower than expected US April jobs data. Copper made new highs.
SOYBEANS
Soybeans traded higher. Funds turned active buyers on concern about inflation. Funds want to own hard assets like soybean and metals as a hedge against Inflation. Argentina soybean harvest is near 53 pct done versus 78 last year. Argentina estimates their soybean crop near 43 mmt vs USDA 47.5. China May-April total soybean imports were near a record 104.5 mmt or up 18 pct from last year. Trade assume China may buy 40 mmt US 2021/22 soybeans vs 36 this year. Matif and Canada rapeseed futures continue to make new highs. Canada March 31 canola stocks were near 6.6 mmt vs 6.7 expected And 10.6 last year. Fact SN is near 16.00 this early in the 2021 season suggest a demand led rally that could go higher to slow US crush demand. SX near 14.40 could go higher if there is any problem with US 2021 crop. Most look for US soybean plantings near 54-57 pct. Low SX/CZ ratio could limit increase in US soybean acres from USDA March intentions.
CORN
Corn futures continued to rally. Talk of new fund money buying hard assets including corn due to a hedge against inflation is just adding to bullish fundamentals. Fact CN is near 7.32 this early in the crop season suggest demand led rally. CZ near 6.36 could go higher if there is any US summer weather problem. Midwest should see showers over the next 7 days. Day 14 show some ridging in the plains and west Midwest. 43 pct of the Midwest topsoils are short moisture. Trade looks for US corn planting near 70-72 pct. USDA announced 1,360 mmt of new crop US corn sold to China. There is talk that China may now have bought a total of 5-6 mmt new crop US corn. Some feel they may be behind their US new crop buying. China is expected to take all of the 12 mmt of US open unshipped corn sales. Some say the need the corn with talk their corn stocks may be as low as 50 mmt vs USDA guess of 196. Some fear now that Brazil 2021 corn crop may be below 90 mmt versus USDA guess of 109. This could add 400-500 mil bu of additional US 2021/22 corn exports. Trade will be watching to see if USDA lowers Brazil crop, raise China imports, raise US export and lower US carryout on May 12.
WHEAT
Wheat futures followed higher corn trade. Wheat has to be a follower of corn on upside as to insure too much wheat feeding. USDA already forecasting record Global wheat feeding. Canada March 31 wheat stocks were near 16.2 mmt vs 16.7 expected and 18.8 last year. New Canada farmer selling may slow as price trend higher and weather is dry. WN is near 7.61. KWN is near 7.37. MWN is near 7.97. All of these prices are above fundamental value. There is concern about NW HRS summer weather could lower wheat crops there. There is already talk that ND farmers may be switching wheat acres to corn and/or soybeans. Wheat may be just an observer to higher demand for US soybean crush and US corn exports. Still EU wheat new crop wheat prices are trending higher on concern about 2021 crops. Russia cops are rated mostly good but there is too much rain on the east. This week on twitter, Reddit suggested corn futures could test 12.00, soybean 20.00 and wheat 14.00.
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.
