Written Commentary
Morning Outlook
Grains are mixed. SX is up 3 cents and near 9.94. SMZ is near 320.6. BOZ is near 34.25. CZ is down 1 cent and near 3.64. WZ is down 1 cent and near 5.437 KWZ is unchanged and near 4.67. US stocks are higher. US Dollar is lower. Crude is higher. Gold is marginally higher.
Chinese Ag futures (January) settled down 2 yuan in soybeans, down 3 in Corn, down 44 in Soymeal, unchanged in Soyoil, and up 22 in Palm Oil.
The 6 to 10 day forecast for the Midwest had no major changes as dry weather is seen through the weekend Temps are seen running below average. The 11 to 16 day outlook for the Midwest also has no major changes with below average rainfall and average to above average temps forecasted.
Last evening’s GFS model run had a strong upper-level disturbance shown to drop down into the central U.S. and then also stall for a while in the Sep. 25 – 30 period. This led to the significant increases of rainfall in Texas, Oklahoma, Kansas, the Delta, and portions of the Corn Belt within this timeframe.
China buying US soybean continues to support soybean prices versus near record managed fund net long and many feel prices are too high and futures are overbought. NOPA US August soybean crush was lower than expected but soyoil stocks dropped for the 4th straight month. China announced pig herd is up 31 pct and sow herd is up 37 pct but they sold another 20 kt of frozen reserve pork. To date sales are near 570kt.
WTO ruling against US tariffs on China goods raising questions about US and China relations and their total import of US goods based on Phase 1 trade deal. US can appeal the decision. US elections just 48 days away. Conditions suggest a winner may not be known until later in November.
Corn prices remain near season highs. Approaching US harvest offers resistance but US farmer is still a reluctant seller until he gets into the fields. Whether China buys 7 mmt or 20-25 mmt imported corn in 2020 and 25-30 mmt in 2021 could be key to prices. Drop in US corn crop due to August weather is also offering support to prices. USDA Oct 9 report could be key especially if they drop the crop further. Since 1974, USDA has raised Oct corn yield 26 times and dropped 17 times. Net change has been 2 pct or 2.5 bpa.
Wheat futures have been supported by dry weather in EU, Russia, Argentina and W Australia. The dry Black Sea weather has also slowed Russia farmer selling. Fact New crop Russia prices are beginning to fade offers resistance to World wheat prices.
On Tuesday, Managed funds were net sellers of 7,000 contracts of SRW Wheat; sold 12,000 Corn; sold 6,000 Soybeans; sold 2,000 Soymeal, and; net sold 2,000 Soyoil. We estimate Managed Money net long 18,000 contracts of SRW Wheat; long 46,000 Corn; net long 193,000 Soybeans; net long 38,000 lots of Soymeal, and; long 91,000 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.
