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Risk Off Again as Grains Are Lower


Risk off again. Grains are lower. SX is down 12 cents and near 14.20. Overnight high was 14.42. SMZ is near 419.6. BOZ is near 66.10. CZ is down 9 cents and near 6.67. Overnight high was 6.80. WZ is down 6 cents and near 8.13. KWZ is down 6 cents and near 8.91. MWZ is down 6 cents and near 9.13.

US stocks are mixed. US Dollar is higher. Crude is lower and below $90. Gold, silver, copper, coffee and sugar are lower. Markets turned lower due to higher EU August inflation than expected.

Soybeans are lower. Dalian soybeans, palmoil and soyoil were lower. Soymeal was higher. China PMI was lower than expected underscoring their economic slowdown. This could reduce their raw material imports including US soybeans. US soybean board crush is highest since 2009. Cash crush margin is even higher. US domestic soymeal and soyoil demand remains strong but South America export prices are still a discount to US. No USDA export sales report this week. USDA did announce 264 mt US 2022/23 soybean sales to unknown. Talk of record US and 2023 South America soybean crops is negative to futures.

Corn futures turned lower after EU inflation data. Corn futures and cash prices fighting strong domestic basis and demand as stocks decline versus slow export market. Some US domestic buyers are bidding as much as +100CZ for corn. There will be no USDA export sales report this week. Ukraine export prices may be near -40CZ. This suggest Ukraine October corn export prices in near $253 versus US $323. EU corn export prices are some 15 euro above domestic price. US harvest could start on late September. Some feel US farmer could sell cash at harvest but may be not enough to satisfy end users needs.

Wheat futures are also lower. Most month end short covering may be done. Concern about global stagflation and inflation quickly turning to deflation could reduce global food demand. Many US jobs go unfilled while many workers are struggling to pay higher total bills. This could also slow food demand and restaurant dining. US wheat export prices are uncompetitive. US SRW export price is near $346 while Black Sea is near $315. Russia continues to lower export tax which is giving buyers some new confidence in buying wheat forward. Like US futures Matif wheat futures remain in a 305 to 335 euros range.

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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