Written Commentary
by Steve Freed
Grains are mixed to higher. SN is up 5 cents and near 8.49. CN is up 1 cent and near 3.19. WN is down 2 cents and near 5.20. KWN is down 3 cents and near 4.75. Stocks are higher. Crude is higher. US Dollar is lower. Phone call between US and China trade negotiators about reopening trade talks may be helping stocks and grains. The two had not talked since January.
US and Global weather remains mostly favorable for 2020 crops except some dryness in US south plains. Cold US temps should not hurt early corn crop or winter wheat. Temps could drop below freezing in SE MN, NE IA, WI, N IL, MI, IN, OH and KY. US Midwest weather looks favorable after May 14.
China April soybean imports were 6.7 mmt. This was below estimates, May-June imports are est near 21 mmt. Oct-June imports are est near 69.5 mmt or up 6 mmt from last year. Most of May-June imports will be from Brazil. USDA est of total imports near 89 mmt may be too low. Soybean prices though may not trade over 8.70-8.80 unless China buys more US or there is a weather problem.
Most doubt Dec corn can trade much above 3.40. Some even suggest US farmers complete 2019 crop sales near 3.24 CN. Drop in ethanol demand could suggest higher carryouts and lower prices unless there is a weather problem or China buys a large amount of US corn. Rally in Crude and drop in corn prices has helped ethanol margins but they are still negative. Some feel ethanol prices need to trade to 1.25/gal vs 1.09 to start reopen plants.
Wheat prices continue to find resistance from recent rains in EU and Black Sea. 2020 north hemisphere weather still needs to be normal to produce record crops that are now forecast. Drop in global demand will keep prices on the defensive unless they is a weather problem. US south plains will need normal rains to produce crop that is forecasted.
Average trade guess for US 2019/20 corn carryout is near 2,224 mil bu vs 2,092 previous, soybean 488 vs 480 and wheat 968 vs 970. Average trade guess for US 2020/21 corn carryout is near 3.389 mil bu, soybean 430 and wheat 814. Average trade guess for US 2020 winter wheat crop is 1.245 mil bu vs 1,304 last year, HRW 739 vs 833 and SRW 280 vs 239.
On Thursday, Managed funds were net buyers of 5,000 contracts of SRW Wheat; net bought 12,000 Corn; bought 10,000 Soybeans; net even Soymeal, and; bought 3,000 Soyoil. We estimate Managed Money net long 17,000 contracts of SRW Wheat; net short 149,000 Corn; net long 14,000 in Soybeans; net short 8,000 lots of Soymeal, and; net short 8,000 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
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.
