Written Commentary
SOYBEANS
Soybean futures ended higher. Some link the higher price action to talk of lower South America supplies. Some are now estimating that South America soybean crop losses could reach 40 mmt. SH and BOH are making new highs. Soyoil is supported by talk of higher biodiesel demand and fact soyoil is a discount to palmoil. Indonesia halting palmoil exports and talk US want to ban imports from Malaysia largest palmoil plantation has rallied palmoil prices.. SX is making new highs on talk US 2022/23 US balance sheet may be tighter now than 2021/22.
CORN
Corn futures ended higher. Some now estimate that South America corn crop losses could reach 20 mmt. Some are now using a US 2021/22 carryout of 1,200 due to higher ethanol and export demand. CH ended near 6.36. CH contract high is near 6.40. Trade is also concerned that escalated conflict in the Ukraine could slow the 700 mil bu of corn exports they are expected to ship over the remainder Of their market year. There were reports today that Russia was moving Medical staff and supplies to the Ukraine border for possible invasion. Shipowners are adding a war clause to contracts in case sold cargoes can Not be loaded. China relies on Ukraine corn for imports. China is the Largest corn short in the market. USDA estimates World corn crop at 1,206 mmt. Of the total US is 383, China 292, Brazil 115, EU 70 and Argentina 54. World exports are 204. US is 61, Brazil 41, Ukraine 33 and Argentina 39. Key time for Argentina corn is Feb-March, Brazil second crop April-May. World corn end stocks are 303 mmt, Of which China is 210, US is 61, Ukraine 1.4, Russia .4, Brazil 6.2 and Argentina 2.1.
WHEAT
Wheat futures ended higher. WH ended near 7.86. KWH ended near 8.04. MWH ended near 9.20. The Biden administration is narrowing its targets for economic sanctions against Russia if it attacks Ukraine to hitting major Russian banks, state companies and needed imports. Off the table, for now, are sanctions on oil and natural gas exports or disconnecting Russia from SWIFT, the basic infrastructure that facilitates financial transactions between banks across the world. Outside market headlines also dominates trade. IMF lowered World 2022 economic growth to 4.4 pct from 5.9 in 2021. US 4.0 from 5.2. US inflation rate hit highest in 40 years. This could reduce consumer demand for food. A bright note, US Q4 GDP rose and unexpected 6.9 pct versus 5.7 in all of 2021. Dry US weather supports wheat especially KC vs Chicago. USDA dropped their rating this week of the US 2022 winter wheat crop.
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.
