January 15 Afternoon Comments

By Steve Freed | ADM Investor Services, Inc.

Soybeans, soyoil, soymeal and corn traded lower. Wheat traded higher. US stocks were higher. US Dollar was lower. Gold was higher. Crude was lower.

SOYBEANS

US and China finally signed the Phase 1 trade deal. Took a while for POTUS to acknowledge how important the deal was to US companies and China consumers. Soybean futures dropped on lack of details and fact China said they will buy what they need. Soyoil dropped following lower palmoil prices. Drop in palmoil exports and conflict between India and Malaysia weighed on Soyoil futures. Higher than expected US Dec NOPA crush may have also weighed on soyoil prices. China agreed to buy $200 Billion dollars of US product and services. China bought $130 Billion of US goods in 2017 and $56 billion services. China has agreed to buy $12.5 billion dollars of AG goods year 1 and $19.5 billion in year 2 for a total of $32.0 billion. This is above the annual baseline buying of $24 billion. Weekly US soybean export sales are est near 400-800 mt vs 355 last week. SH is near key support. Trade below could start a new down trend. Good Brazil weather and forecast of normal rains over the next 2 weeks helps support USDA estimate of 2020 soybean crop near 123.0 mmt vs 117.0 last year. Some estimates are as high as 126.0. 2020 Argentina weather has been less than ideal so far. Normal rains are expected next week. USDA estimate of 2020 soybean crop near 53.0 mmt vs 55.3 last year.

CORN

Corn futures closed marginally lower. US/China signed a new Phase 1 trade deal. Market awaits details. Over the last 2 month, corn futures open interest is up 103,000 contracts. Some speculate this could be China positioning themselves for buying US corn. The increase in corn open interest is equal to 4-6 mmt of US corn exports. One key to the deal could be how will the deal be enforced and what would be the penalties if China does not buy what they agree to. US Senate is likely to approve this week USMC trade deal. This could complete a trifecta of trade deals with Japan, US/China and Canada/Mexico. Weekly US ethanol production was up from last week and last year. Stocks were up from last week but are below last year. Margins remain negative. Ethanol futures were up the last few days on speculation that China might buy US ethanol. Spread between annual needs and domestic production is estimated near 4.6 billion gallons. Weekly US corn export sales are est near 300-700 mt vs 162 last week Good Brazil weather and forecast of normal rains over the next 2 weeks helps support USDA estimate of Brazil 2020 corn crop near 101.0 mmt vs 101.0 last year. 2020 Argentina weather has been less than ideal so far. Normal rains are expected next week. USDA estimates Argentina 2020 corn crop near 50.0 mmt vs 51.0 last year.

WHEAT

Wheat futures closed mixed. WH was up 4 cents and near 5.73. KWH was unchanged and near 4.96. MWH was unchanged and near 5.56. US/China signed a new Phase 1 trade deal. Market awaits details. Over the last 2 months, Chicago wheat is up 124,000 contracts. Some speculate this could be China positioning themselves for buying US wheat. The increase in wheat open interest is equal to 3-5 mmt US wheat exports. One key to the deal could be how will the deal be enforced and what would be the penalties if China does not buy what they agree to. US Senate is likely to approve this week USMC trade deal. This could complete a trifecta of trade deals with Japan, US and China and Canada and Mexico. Weekly US wheat export sales are estimated near 200-500 mt vs 80 last week.

The information conveyed by ADMIS or its affiliates to the audience is intended to be instructional and is not intended to direct marketing, hedging or pricing strategy or to guaranty or predict future events, including the pricing and pricing movements of commodities and commodity futures contracts.

2020-01-15T23:50:28+00:00 January 15th, 2020|