Pricing Soybeans
Sell all remaining 2022 (old crop) soybeans. This is generic market information. If you are a full service client, talk to your Wright on the Market guy before you sell anything. His plan is customized for you! Generally speaking, it is not a bad idea to sell your fall delivery new crop beans. Yes, we think they will go higher at some point this late summer or fall, but we might be wrong. China might invade Taiwan, maybe normal rainfall in August, maybe above normal rainfall in August, etc. The weather guys are saying the high-pressure ridge that will keep the Corn Belt hot and dry the next 10 days, will begin to break down the first week of August, letting cooler air and more normal rainfall for the Corn Belt. Two days ago, we included the latest ENSO chart. Here it is again. Read that second sentence with an arrow pointing to the right:
These ENSO charts provide the most reliable 20 to 30+ day weather forecasts, period. Yes, all of us at Wright on the Market expect soybean futures to go higher simply due to tight supplies, but if August produces normal rain in the Corn Belt, soybean futures are not going higher until mid-October into the end of year. Sell old crop beans. If they go higher, as we expect eventually, you can buy puts and make the money on the way down you did not make on the way up… if beans go up. Cash prices for 2022 beans are higher right now than they have ever been. Eliminate down side risk, sell the beans and hope they go higher so you can buy cheaper puts.
Tidbits
Yesterday morning news was that Russia attacked two Ukrainian grain loading ports, killed three people and injured 27 more. China’s consulate in Odessa had windows blown out. China will not say much about the windows. Crude oil is much more important for China than glass. China released customs data yesterday which showed they imported more Russian crude oil in June than any month before; 10.5 million mts of crude oil at a rate of 2.56 million barrels per day.
Ukraine upped the ante yesterday by announcing all ships traveling to Russia or Russian occupied ports on the Black Sea will be considered transporting military weapons and will be subject to missile strikes. If insurance companies do not cover Russian ships or ships carrying Russian cargo, the #1 wheat exporter is out of the wheat business.
India, the world’s #1 rice exporter, has banned all rice exports. Rice competes with wheat for world market share.
Tidbits
As Nick and Eugene reported in yesterday’s email that December palm oil made a new contract high yesterday. Palm oil had been supported by El Niño weather impact in Malaysia and Indonesia, but now that war has taken the #1 sun oil exporter, Ukraine, out of the vegetable oil business, all the other veg oils have become more expensive. There are 9 vegetable oils traded. Palm oil is #1 by volume, soybean oil is #2, sun oil is #3, rapeseed oil is #4, palm kernel is #5. Coconut, olive, peanut, and cottonseed are the least traded oils. The World Meteorological Organization has declared the onset of the first El Niño event in seven years. They were very slow to come to that conclusion as every major weather organization in the world said the same two and three months. In any case, they want you to know that El Niño events bring hotter, drier weather to places such as Central South America (Brazil’s primary bean and corn growing area), Australia and Indonesia. Peru and Ecuador get heavy rain and devastating floods. The Wheat Quality Council’s Hard Spring Wheat and Durum tour begins Monday. Today’s Cattle on Feed estimates as a percent of a year ago:
On Feed: 97.8
Placements: 98.2
Marketings: 95.3
The semi-annual Cattle Inventory numbers will also be released today. It is expected the cow numbers will be the lowest since 2014 with Beef Replacement Heifers at 96.4% of a year ago. We are guessing that number will be less than 95.4%. CF Industries is the world’s largest producer of ammonia and therefore, nitrogen fertilizer. They are expecting a very profitable year in 2024. Something to think about: if you are going to pay through the nose for fertilizer, why not own part of the company that makes it? CF Industries dividend the past year was 2.1%. The big news in nitrogen fertilizer is making “clean” ammonia, which will make it more expensive, of course. Here is an analysis and outlook of CF Industries written by Laura Starks of Econ-Based Energy Investing: https://seekingalpha.com/article/4618115-cf-industries-adds-clean-ammonia-growth-prospects
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Market Data
Prices are as of 0:45 am ET:
Crude oil is at $76.28, up $0.63
The dollar index is at 100.77, down 0.11
December palm oil is at 4,049 MYR, down 2. The contract high was made today at 4,085 MYR. Palm oil owns 61% and soybean oil owns 14% world market share.
December cotton is at $84.27, down $0.04 per cwt. The contract high was made yesterday at $84.90 per cwt. Cotton competes with soybeans and corn for acres.
December natural gas is at $3.564, down 0.009. The contract high was made March, 24th at $3.805. Natural gas is the primary cost to manufacture nitrogen fertilizer.
December ULSD is at $2.6207 per gallon, up 0.0147. The contract high was made April, 3rd at $2.6391. ULSD stands for Ultra Low Sulfur Diesel.
September Dow Futures is at 35,455, up 54. The lifetime high is 36,832 on January 5th, 2022.
Rain Days Update
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days