Ag Market View for Nov 17th
The soybean market was lifted aggressively today by the announcement of a US sale of soybeans of 132,000 tonnes to China. In fact, January Soybeans made a 34-day high and probably saw some inflation-based buying along with the commercial/hedge buying. Also contributing to the upward action in beans today were reports of strong demand for edible oils. However, soybean oil gains were undersized relative to soybeans gains which in turn could suggest soybean oil is not perceived to be an undervalued deflated commodity.
The grain markets appear to have been lifted during Wednesday’s trading session by a revival of export demand and by inflationary interest in many physical commodities. The corn market rallied despite news that Argentine corn plantings will rise by 1% perhaps because South Korea purchased 138,000 tonnes of corn today. With the cash corn market flat early on, the sharp gains in corn futures were obviously inspired by fundamentals beyond the farm. Ethanol production for the week ending November 12th averaged 1.06 million barrels per day. This is up 2.02% vs. last week and up 10.19% vs. last year. Total Ethanol production for the week was 7.42 million barrels. Stocks as of November 12 were 20.081 million barrels. This is down 1.01% vs. last week and down 0.60% vs. last year. Corn used in last week’s production is estimated at 107.61 million bushels. This crop year’s cumulative corn used for ethanol production for this crop year is 1.08 billion bushels. Corn use needs to average 100.082 million bushels per week to meet this crop year’s USDA estimate of 5.25 billion bushels.
With Chicago wheat forging a new contract high and strength throughout the grain complex, we suspect a measure of inflation related buying lifted wheat prices during Wednesday’s trading session. While the US missed out on some export business, news that Russia is seeing demand from Algeria, Japan, and China provided the bull camp with fresh confidence. Another positive development was a Turkey tender to buy 385,000 tonnes of wheat. Apparently, the wheat market is unconcerned about reports that good soil moisture Indian for the 2022/2023 crop conditions looks to put Indian production at record levels!
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.