Written Commentary
by Steve Freed,
SOYBEANS
Soybean and soymeal traded lower. Lack of China buying US soybean and talk of lower US domestic soymeal demand offered resistance. Argentina Peso continues to drop. There is concern that the spread of the virus might slow their economy and they may default on their IMF debt. Lower Peso though could increase their Ag production. Brazil fired their Health Minister as virus spreads there. Still, Brazil remains an active sellers of soybean especially to China. For the week, July soybean futures dropped 33 cents. Open Interest is going up. There could be new selling due to fact China is not buying US soybeans and US domestic soymeal demand may be slowing due to slowdown in meat demand and processing. World vegoil prices are firming led by palmoil on lower supplies and hope demand especially China returns. FAPRI est Covid 19 will drop US cash soybean prices from the baseline January guess 6 pct from $8.85 to $8.27.
CORN
Corn futures traded higher. Futures had become oversold and lack of farmer selling was beginning to offer support to nearby futures. US Midwest weather forecast suggest US Midwest could see warmer and drier weather next week. This could help planting but also limit farmer selling. Corn may have also found some short covering on talk that a slow return of US workers could increase traffic and gasoline demand. This week though 4 states asked waivers in blending ethanol in gas formula. Drop in ethanol demand has weighed on corn futures. For the week, July corn futures dropped 12 cents and made new lows. Open interest is going up. Total US corn export commit is running 395 mil bu behind last year. Some forecast total US 2019/20 corn demand could be down another 300 mil bu. FAPRI est Covid 19 will drop cash corn prices 9 pct from $3.70 to $3.35. Cattle down 11 pct from $122.10 to $108.0. Hogs down 9 pct from $53.15 to $48.30. Broilers down 8 pct from 89.25 to 81.23. Milk down 9 pct from $19.46 to $17.75.
WHEAT
Wheat prices traded higher. Market had become oversold. Prices have been pressured due to talk of better Russia weather next week. Europe remains dry but May forecast suggest normal rains for Europe and most of south Black Sea. This week, Egypt bought cheaper Russia and French Wheat in their tender. Talk that US plans to reopen the economy may have also helped equities, corn and wheat. For the week, July Chicago wheat futures is down 39 cents. Open interest has dropped 150,000 contract since Feb. This due to slowdown in export trade and improving World 2020 crop weather. This week NOAA estimated most favorable US Midwest 90 day weather. Heat should stay south of the crop areas and rains should be near normal. FAPRI est that virus will drop baseline US cash wheat prices 5 pct from $4.84 to $4.58.
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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.
