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Day After USDA Report For Grains

MORNING OUTLOOK

Day after USDA. Grains are mixed. SH is up 3 cents and near 14.21. SMH is near 462.9. BOH is near 42.87. CH is up another 18 cents and near 5.35. WH is up 5 cents and near 6.70. KWH is up 7 cents and near 6.29. US stocks are lower. Drama in Washington? US Dollar is higher. Crude is higher. Gold is higher. Copper is higher.

Chinese Ag futures (May) settled up 8 yuan in soybeans, up 48 in Corn, up 104 in Soymeal, up 20 in Soyoil, and down 20 in Palm Oil. Malaysian palm oil prices were down 6 ringgit at 3,689 (basis March) on trade positioning.

Conditions will still be very good in much of Brazil. Some pockets of the far south and northeast may still become drier than preferred in the second week of the outlook. A notable rain event is still expected to impact central and northern Argentina Friday into Saturday due to a frontal boundary. The rain will be important due to the lengthy period of dryness that is still expected to follow it.

USDA dropped US 2020/21 corn carryout to 1,552 mil bu. USDA dropped last years crop 14,182.  USDA also estimated US Dec 1 corn stocks at 11,322 versus 11,951 expected. In order to get a carryout near 1,552 USDA dropped exports 100? and domestic use 150? Most see exports will be up 250 which suggest a carryout closer to 1,050 and higher prices to slow demand. The beat does not stop there. Some see a 1.1 million increase in US 2021 planted acres, a yield of 180.5 versus 172 last year, a crop of 15,235, demand near 15,205, exports 2,400 ethanol use 5,365 and carryout of 1,285. This could be more than a 2021 problem.

USDA dropped US 2020/21 soybean carryout to 140 mil bu. USDA dropped last years crop 4.135.  USDA also estimated US Dec 1 soybean stocks at 2,933 versus 2,920 expected. In order to get a carryout near 140 USDA increased imports 20 mil bu (from where) increased exports only 30? and crush 5? Most see exports will be up 95 which suggest a carryout closer 50 and higher prices to slow demand. The beat does not stop there. Some see a 7.4 million increase in US 2021 planted acres, a yield of 50.5 versus 50.2 last year, a crop of 4,525, demand near 4,495, exports 2,175 crush 2,180 and carryout of 99. This could be more than a 2021 problem.

USDA wheat numbers were in line with trade guesses. USDA estimated US Dec 1 wheat stocks at 1,674 versus 1,695 expected and 2,159 last year. USDA left exports at 985. Some estimate exports closer to 1,015 which suggest a carryout closer to 829. The beat does not stop there. USDA estimated winter wheat acres at 32.0 versus 31.5 expected and 30.4 last year. Most look for a crop of 1,875, demand near 2,135, exports 1,000 and carryout of 700. This could be more than a 2021 problem. Wheat remain a follower of corn but Matif Paris wheat futures hit a 7 year high. Russia export tax and actual exports will be key to how high wheat prices need to advance. Some feel KC wheat will continue to gain versus Chicago.

On Tuesday, Managed funds were net buyers of 25,000 SRW Wheat, 33,000 soybeans; 1,000 soyoil and 13,000 soymeal; and 58,000 corn (some say 75,000). We estimate Managed Money net long 36,000 contracts of SRW Wheat ; long 378,000 Corn; net long 226,000 Soybeans; net long 109,000 lots of Soymeal, and; long 107,000 soyoil.

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.

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