Afternoon Grain Commentary 2018-08-29T18:26:48+00:00

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January 22 Afternoon Comments

By Steve Freed | ADM Investor Services, Inc.

SOYBEANS

Soymeal futures ended lower. Slower US domestic demand offset a pick up in export demand. US soymeal prices are competitive versus Argentina. Soymeal open interest has increased 44,000 contracts on recent downtrend in prices. Palmoil prices turned higher on talk India might drop their import tax. Soyoil open interest has jumped 131,000 since the market started to rally in June from 28 cents per pound to recent highs near 35 cents. Soybean open interest jumped 170,000 contracts when prices dropped from near 9.70 in October to a low near 8.80 in early December. Open interest dropped 145,000 contracts on the recent rally from 8.80 low to 9.60. Open interest is now increasing on the drop in prices from 9.60 to 9.13. Trading range in part due to favorable 2020 South America crops and talk of a higher US 2020 crop versus hope China is a big buyer of US soybeans.

CORN

Corn futures continue to struggle to trade over 3.92. Large unsold US inventory from the 2019 crop and talk of higher US 2020 acres and supply plus continued slow US export pace limits upside in prices. Lack of any move against ethanol waivers also limits the increase in ethanol production. The only hope for corn prices is that China has agreed to buy US Ag goods which could include corn, DDG, ethanol and sorghum. Fact they could be large buyers of US meats could also increase US domestic corn feeding. US domestic corn basis remains historically strong due to slow farmer selling. Still lack of a bullish USDA January crop report may have lowered US farmers price objective to increase cash sales. Futures open interest remain near season lows. Open interest did increase on the rally from 3.71 March to 3.92. On Tuesday open interest dropped 17,000.  Some link that to short covering. Most look to sell China buying rallies and could see lower price trend into the fall if 202O crop is normal.

WHEAT

Wheat futures found some profit taking after hitting new 4 year highs. Open interest jumped 13,000 contracts on Tuesday linked in part to continue French protest pushing French wheat prices higher. Open interest has jumped 150,000 contracts since the wheat rally started in early September when March Chicago wheat was near 4.60. Talk that China could buy US wheat in the new trade deal with US and talk of slower Russia wheat export pace has also helped March Chicago wheat futures rally to near 5.92. It may need new US export demand or lower 2020 World supplies to push nearby Chicago wheat futures over 6.00. Range of guesses for US 2020/21 wheat end stocks is 700-960 mil bu. Key is size of US crop and export demand. Some estimate 2020/21 World wheat crop near 758 mmt versus 764 this year. End stocks could be near 270.0 mmt versus 288.0 this year.

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.

January 22nd, 2020|
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January 22 Afternoon Comments

By Steve Freed | ADM Investor Services, Inc.

SOYBEANS

Soymeal futures ended lower. Slower US domestic demand offset a pick up in export demand. US soymeal prices are competitive versus Argentina. Soymeal open interest has increased 44,000 contracts on recent downtrend in prices. Palmoil prices turned higher on talk India might drop their import tax. Soyoil open interest has jumped 131,000 since the market started to rally in June from 28 cents per pound to recent highs near 35 cents. Soybean open interest jumped 170,000 contracts when prices dropped from near 9.70 in October to a low near 8.80 in early December. Open interest dropped 145,000 contracts on the recent rally from 8.80 low to 9.60. Open interest is now increasing on the drop in prices from 9.60 to 9.13. Trading range in part due to favorable 2020 South America crops and talk of a higher US 2020 crop versus hope China is a big buyer of US soybeans.

CORN

Corn futures continue to struggle to trade over 3.92. Large unsold US inventory from the 2019 crop and talk of higher US 2020 acres and supply plus continued slow US export pace limits upside in prices. Lack of any move against ethanol waivers also limits the increase in ethanol production. The only hope for corn prices is that China has agreed to buy US Ag goods which could include corn, DDG, ethanol and sorghum. Fact they could be large buyers of US meats could also increase US domestic corn feeding. US domestic corn basis remains historically strong due to slow farmer selling. Still lack of a bullish USDA January crop report may have lowered US farmers price objective to increase cash sales. Futures open interest remain near season lows. Open interest did increase on the rally from 3.71 March to 3.92. On Tuesday open interest dropped 17,000.  Some link that to short covering. Most look to sell China buying rallies and could see lower price trend into the fall if 202O crop is normal.

WHEAT

Wheat futures found some profit taking after hitting new 4 year highs. Open interest jumped 13,000 contracts on Tuesday linked in part to continue French protest pushing French wheat prices higher. Open interest has jumped 150,000 contracts since the wheat rally started in early September when March Chicago wheat was near 4.60. Talk that China could buy US wheat in the new trade deal with US and talk of slower Russia wheat export pace has also helped March Chicago wheat futures rally to near 5.92. It may need new US export demand or lower 2020 World supplies to push nearby Chicago wheat futures over 6.00. Range of guesses for US 2020/21 wheat end stocks is 700-960 mil bu. Key is size of US crop and export demand. Some estimate 2020/21 World wheat crop near 758 mmt versus 764 this year. End stocks could be near 270.0 mmt versus 288.0 this year.

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.

January 22nd, 2020|
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