May Day. Grains Starting Lower on China Tensions

by Steve Freed,

May Day. Grains are lower. SN is down 6 cents and near 8.48. CN is down 3 cents and near 3.13. WN is down 7 cents and near 5.17. US stocks are lower. US Dollar is lower. Crude is lower. Fact POTUS is asking China for reimbursement from China for US economy losses due to the virus and that he may reinstate tariffs against China is weighing on commodity prices.

Fact weekly US soybean export sales were higher than expected offered support to prices on Thursday. New tension between US and China is offering resistance today. Argentina soybean harvest is near 68 pct done. Estimates of the crop is near 48-50 mmt versus USDA 52. Steep discount from old crop to new crop Argentina export prices could suggest US soymeal may be less competitive later in the year. US soybean plantings are estimated near 17 pct versus 11 average. US weekend weather should be favorable for planting. Many are suggesting increase farmer cash sales near 8.70-8.80 SN.

Better than expected weekly US corn and sorghum export sales offered support to future on Thursday. Increase tension between US and China and drop in US domestic demand is weighing on prices today. US weekend weather should be favorable for planting. US corn planting pace is estimated near 46 pct done versus 39 average. Many are suggesting increase farmer cash sales near 3.25-3.30 CN.

Wheat futures followed corn and soybean higher on Thursday. Increase tension between US and China is weighing on wheat and commodity prices today. First private guess for US 2020 winter wheat crop is near 1,243 mil bu vs 1,304 last year. KS is est near 294 vs 338 last year. 35 pct of US SW HRW crop are is dry. USDA report is May 12. KWN resistance is near 5.00-5.10. WN resistance is near 5.30.

On Thursday, Managed funds were net buyers of 5,000 SRW wheat contracts, bought 14,000 corn, bought 11,000 soybeans, bought 4,000 soymeal and 3,000 soyoil. We estimate Managed funds were net long 8,000 contracts of SRW Wheat; net short 162,000 Corn; net long.

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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.