by Steve Freed
Soybeans ended higher. ETF commodity volume is on the increase. These funds are moving from the equity market. This is new buyers linked to tightening World supplies and shift from South America exports potentially to US. Soybeans found some support on talk that China soybean crushers need to buy 180-220 mil bu for April-May. They also need to buy 1,025-1,100 mil bu for June-Sep. Of that total, they need to buy 500-550 mil bu for Aug-Sep at a time when Brazil soybean supply is limited and US carryout is near 285 mil bu. Matif and Canada rapeseed futures are making all time highs. Weekly US soybean export sales are estimated near 500-1,300 mt vs 1,730 last week. There were no new US soybean daily export sales announced today. Next week is month end and quarter end and USDA acreage and March 1 stocks report.
Corn futures ended higher. CK ended near 7.57. Session high was 7.70. CZ ended near 6.72. Talk of higher inflation supported a rally in most commodities and weighed on US equities. US Fed Chairman comments about increasing rates to fight inflation also supported commodities. ETF commodity volume is on the increase. These funds are moving from the equity market. This is the new buyers linked to tightening World grain supplies and shift from South America and Black Sea exports potentially to US. Weekly US corn export sales are estimated near 800-1,800 mt vs 1,836 last year. Favorable Brazil weather may be helping Brazil 2nd corn crop. This has pulled back Brazil July corn export price below US. Trade still looking for some news that China may need to buy 240 mil bu of US corn to replace Ukraine corn that may now get shipped. Ukraine Ag Minister said that Ukraine may not plant 50 pct of 2022 spring crop acres. There is some concern about US rail logistics. Labor shortage has slowed rail performance. This has offered some concern that US ethanol plants may not get the cars needed to move ethanol. Weekly US ethanol production was up 1 pct from last week and up 13 pct from last year. Stocks were also up 1 pct from last week and up 20 pct from last year. US margins improved. Series of higher daily lows since March 16 low offers support. Fact we can’t push over 7.82 high offers resistance.
Wheat futures ended lower. Wheat like many commodities were supported early by data showing UK inflation higher than expected and US Fed Chairman looking to increase rates to slow US inflation. Talk of increase Russia wheat exports to Turkey and Egypt triggered new selling. There are reports of heavy money flow into commodity ETF’S, including wheat. Last Friday almost $200 million came into GSCI. There is anticipation of heavy inflows into commodities at the start of Q2. Especially with growing concerns US Fed is falling further behind the curve. There are reports that supply chain may be healing but while the Fed can restrict M2 they cannot bolster the supply side of the inflation story through rate hikes. How to fight inflation, achieve a soft landing and avoid a major recession will be a story playing out over the rest of 2022. US south plains moisture is helping wheat there. More showers are possible the next 10 days. Some feel then a ridge of high pressure could develop over US plains in mid April. Weekly US wheat export sales are est near 100-600 mt vs 471 last week. US export prices remain a premium to Europe and Black Sea.
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