Grains Are Higher After Selloff

MORNING OUTLOOK

Crazy markets!! Grains are higher. SU is up 35 cents and near 13.48. SX is up 35 cents and near 13.40 SMU is near 367.7. BOU is near 60.32. CU is up 2 cents and near 5.54. CZ is up 3 cents and near 5.43. WU is up 4 cents and near 6.30. KWU is up 7 cents and near 5.90.  MWU is up 12 cents and near 8.06.

US stocks are higher. Crude is higher. Gold is higher.

Yesterday’s grain and oilseed selloff was extreme and severe. Most blame holiday US Midwest and north plains better than expected rains. For the Dakotas though one rain does not make a crop. Latest maps have reduced the amounts and coverage for the next north plains and upper Midwest rain event. Along with this change there is talk that China was asking for new crop US soybean prices overnight.

Technically Tuesday trade may have been overdone but there is no sign yet of a return to a bull market, US farmers in east and south could be willing sellers on rallies. Their corn crop is almost made with high yield potential. West US farmers are frustrated with light rains amounts and drop in prices.

NASS rated US corn crop 64 pct G/E vs 64 last week and 71 ly. IL, MN, ND, and SD ratings dropped. ND only 35. SD only 24 good. IA, MI, NE, OH, WI ratings increased. 10 pct of the crop is pollinating vs 14 ave.

Tight old crop supply suggest US 2021 yield cannot drop below 175. Brazil safrinha harvest is 12 pct. Crop est near 85 mmt. 2 mmt in export line up with only 190 mt loaded. Brazil domestic corn prices $45 above fob prices. High prices has China farmers add 6 pct planted acres or potential increase of 15 mmt.

NASS rated US soybean crop 59 pct G/E vs 60 last week and 71 ly. IA, MI, MS, OH and WI increased. IL, IN, LA, MN, MO, ND, SD, TN ratings dropped. Some fear dry LH July and August could drop ratings and yield potential. Tight old crop supply suggest US 2021 yield cannot drop below 49.5. 3 pct of the crop is setting pods vs 3 average. July Brazil soybean line up is only 5.8 mmt. 2.4 has been loaded.

NASS dropped US HRS ratings to only 16 pct G/E. 69 pct of crop was heading. US winter wheat harvest is 47 pct done vs 51 ly. KS 62, OK 90, MO 66, OH 30 and OR 2. WA crop is rated 20 pct G/E, OR 12. There is a big increase in World wheat trade with Iran, Egypt, Jordan, Algeria, Turkey. Ethiopia and Bangladesh tendering for World wheat. Black Sea wheat is still the lowest price followed by east Europe.

On Tuesday, Managed funds were net sellers of 14,000 contracts of SRW Wheat; 24,000 soybeans, 12,000 soyoil, 13,000 soymeal and 35,000 Corn. We estimate Managed Money net long 18,000 contracts of SRW Wheat; long 233,000 Corn; net long 72,000 Soybeans; net long 29,000 lots of Soymeal, and; long 36,000 Soyoil.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now