Written Commentary
MORNING OUTLOOK
Grains are mixed. SX is now up 1 cent and near 14.00. SMZ is near 410.1. BOZ is near 62.80. CZ is up 7 cents and near 6.83. WZ is up 34 cents and near 8.51. KWZ is up 29 cents and near 9.11. MWZ is up 23 cents and near 9.13.
US stocks are higher. US Dollar is higher. Crude is higher. Gold, silver, cocoa, sugar and cotton are higher. Copper and coffee are lower.
2 large overnight headlines. Russia is reconsidering the Ukraine export corridor deal. Wheat futures are sharply higher. In a speech, Putin said Russia did everything to ensure Ukraine grain exports? All Ukraine grain moved to EU not poor countries? Food problems will intensify, a humanitarian catastrophe is looming and Russia will have to think of changing routes of Ukraine grain. Putin wants to restrict destinations for Ukraine grain. There is outrageous cheating both of Russia and poor countries. Developing countries have been deceived as they are not getting the grain. Second, La Nina is now projected to last into January. This could reduce rains for South America, US southwest and southern plains.
China’s August crude imports fell 9% year-on-year. China National Petroleum Corporation signed a supplementary agreement with Gazprom to the “Sino-Russian Eastern Route Natural Gas Purchase and Sale Agreement”, which essentially allows for payment on yuan and rubles. Prior to the Ukraine war, EU took 90 pct of Russia’s gas exports.
China imported 7.17 mmt of beans in August, the lowest August total for 8 years. The 12- month total is down 12 pct, and the season total is off 10 pct and in line with the USDA. US export inspections were 496 mt for the last week of the 21/22 season. Reports of a new Ag Peso increased Argentine farmer selling. The weekly US crop update showed ratings unchanged at 57 pct G/E. Losses in crude, fresh highs in the US Dollar and more evidence of a slowing Chinese economy are offering resistance to the soy complex futures.
Corn futures rallied Tuesday after Informa dopped US corn yield 5 bpa and 320 mil bu below USDA August estimate. Weekly US corn exports were 518 mt and below trade estimates. Still interior US corn basis remains strong. US farmer may be reluctant seller of corn until harvest especially after Informa lower US corn yield estimate. USDA rated the US corn crop unchanged from last week at 54 pct G/E. Uncertainty over futures of Ukraine exports offers support. Fact US Dollar continue to make new highs and concern about global recession slowing food and fuel demand offers resistance near key futures price level.
US wheat futures are sharply higher on news Russia may alter the Ukraine corridor export deal. Fresh news yesterday was mostly negative, with the US Dollar making new 20-year highs, export inspections at the low end of expectations, and both EU and Black Sea values slightly lower. Crude near a 6-month lows offers further evidence China falling commodity demand USDA estimated US spring wheat harvest at 71 pct complete vs 83 average US winter wheat plantings are 3 pct complete vs 5 pct both last year and average. Further delays are likely with little or no rain in the Plains for most of the month September.
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.
