Written Commentary
CLOSING COMMENTS
Macroeconomics:
Oil prices are up this week due to both the announcement of a Chinese stimulus and US reported oil inventories fell 3.2 million barrels for week ending Dec 20th. The energy market was only expecting a 1.2 million barrel decline. China’s fiscal stimulus consists of $411 billion aimed at boosting growth through infrastructure and industrial expansion. It is hard to say if this package will help boost grain prices at all. Just the fact that China needs to follow up their previous $1.07 trillion package announced in September is not good news for the state of their economy. The package in September tied for the 3rd largest in history compared to GDP, less than the 2008 package and 2020 COVID package. There was little impact to consumer demand because it focused on monetary policy and the property sector
Ag Fundamentals:
Export sales were slightly disappointing for soybeans, taking into account the rumors of Sino buying 500K-1.2M MT over the last 10 days. Corn, wheat and soybean oil exports all reported above estimate ranges. Solid corn exports are giving further support following yesterday’s 200 day moving average breakthrough. Corn bulls are talking about dry pockets in Argentina, usage regarding ethanol, Chinese stimulus, technical support, the funds flipping their record short to long over 150K contracts, and exports. A US corn production adjustment lower on January 10th’s WASDE report would also add fuel to the bullish fire. The dollar could add another leg to this recent corn run up if we see some weakness following the holidays, currently at 108 on the index. Beans have a window between now and mid February to feed the world before Brazil regains attention. Wheat is getting some attention after Algeria is believed to have purchased up to 1.17 million MT of milling wheat in an international tender on Tuesday. Additionally, Russia’s wheat export number has dropped from 43.5 million MT to 41 million in resent estimates.
The CN5/CU5 July/September Corn Spread has increased over over 28 cents from carry lows in mid July 2024.
NEW YEARS HOLIDAY SCHEDULE
New Years holiday, 12/31-1/2nd
Tues 12/31, Normal session
Wed 1/1, Day and evening market closed
Thurs 1/2, Normal day session, 8:30 am CST open and 1:20 pm CST close
EXPORT SALES
|
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CH25/CK25 | -7 1/2 | – 3/4 | -21 | 36% |
SF25/SH25 | -9 3/4 | – 1/2 | -25 3/4 | 38% |
SH25/SK25 | -10 3/4 | – 1/2 | -26 3/4 | 40% |
SF24/SN25 | -32 | -1 1/2 | -79 | 41% |
MWH25/MWK25 | -8 | +1/4 | -20 1/2 | 39% |
WH25/WK25 | -10 1/4 | +3/4 | -16 | 64% |
KWH25/KWK25 | -8 1/4 | – 1/4 | -16 | 52% |
Cost of Carry
First notice day for January beans is on Tuesday 12/31 next week. Most trade accounts will have exited their positions by end of trade Monday. There has been a sizable corn inverse growing between the CN/CU July/September, closing this week at nearly +25 cents.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
>>Interested in more commentary by Joe Mauck? Go 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.
