Written Commentary
SOYBEANS
Soybeans ended higher. Some look for increased volatility next week in soybeans with China back from Holiday and USDA February crop report. Many feel though China may need to increase buying of US soybeans due to lower South America supplies. StoneX dropped their estimate of South America soybean crop 30 mmt. Parana is down 7 mmt, RGDS down 10 mmt, MGDS down 2 mmt, Argentina down 6.5 mmt and Paraguay down 4 mmt. This could increase demand for US soybean and drop US 2021/22 soybean carryout below 300 mil bu. IHS Markit dropped Brazil soybean crop 7 mmt to 130. They dropped Argentina crop 3 mmt to 42. A Paraguay crop of only 4 mmt could limit exports to Argentina which could drop their crush.
CORN
Corn futures managed a small gain. Higher Crude oil trade and talk US Omicron cases are in decline offered support. StoneX dropped World corn crop 4 mmt due to a 3 mmt drop in Argentina. There was some talk that without rains, Brazil corn crop could drop from USDA 115 mmt to 106. Most feel now better 2nd crop weather could rebound Brazil corn crop to 109-110. CH is undervalued if US demand increases and US 2021/22 carryout drops below 1,200 mil bu. This weeks higher US ethanol stocks, talk of lower China imports and China cancelling US corn sales weighed on corn futures. Some feel the buyer may need the freight for soybeans and China may be back buying US corn next week. Some look for increased volatility next week in the grains with China back from Holiday and USDA February crop report. Many feel though China may need to increase buying of US corn due to lower South America supplies. Big focus next week will be, will funds add corn longs into USDA report? Most doubt USDA will drop South America supplies and raise US demand as much as what some of the private analyst see. The other unknown is tension between China and Ukraine and China and NATO. Ukraine still has 700 mil bu of corn to export this crop year. Interesting that based on a Pro Farmer survey more farmers see higher farmland prices in 2022. 2021 farmland prices were up 39 pct. Survey also suggested that there may be more farmers willing to buy than sellers.
WHEAT
Wheat futures were higher as traders start to cover short Chicago wheat positions. Spreaders may also be liquidating short wheat and long corn and long soybean spreads. StoneX raised 2021 Australia crop almost 2 mmt and Ukraine 2022 crop 1 mmt. Weekly US export sales were low and suggested USDA could drop US wheat exports and raise US carryout next week. Weather is still key with some forecasting US south plains dry weather extending into March. IHS Markit underscored this weeks USDA HRW crop ratings below average and last year. Lowest rated crop was in TX and OK. IL and OH SRW crops were rated below average while MO and IN were average or above. Global food pieces are higher and near the record high in Feb, Cereal grains are up 12 pct, vegoils up 34 pct, dairy up 18 pct, meat up 17 pct and sugar up 19 pct. WH held 200 day moving average support near 7.42. Next resistance is 7.72-7.76. KWH held above 7.50 support. Next resistance is 7.87-7.89. MWH held 200 day moving average support near 8.96. Next resistance is 9.18 then 9.50.
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.
