Commodity Traders Weekly Outlook: Natural Gas on Fire, Grains Sell Off

For the second week natural gas led the commodities pile, continuing its recover surging over 14% for the week. Grains again were the week’s biggest losers with Canola, rice, corn, soybeans beans and meal all down over 5% on the week. Last week’s WASDE report impacting prices again. Both gold and silver ran continued lower but did bounce late Friday to mitigate much of the damage as the debt ceiling hopes faded. The move was influenced by the US dollar strengthening on rising yields and safe haven buying. Two-year Treasury yields surged 28 bps this week to a 10-week high 4.27%. The Bloomberg Commodities Index little changed (down 10.4% y-t-d). 

Copper Rally Continued

Week Ending May 19, 2023


Weekly Commodity Highlights

  • Bloomberg Commodities Index was little changed (down 10.4% y-t-d).
  • Spot Gold declined 1.6% to $1,978 (up 8.4%).
  • Silver slipped 0.5% to $23.85 (up 0.4%).
  • WTI crude recovered $1.51, or 2.2%, to $71.55 (down 11%).
  • Gasoline rallied 6.0% (up 5%), and
  • Natural Gas surged 14.1% to $2.59 (down 42%).
  • Copper was little changed (down 2%).
  • Wheat dropped 4.7% (down 23%)
  • Corn sank 5.4% (down 18%).
  • Bitcoin gained $155, or 0.5%, this week to $26,890 (up 62%).

“High interest rates, volatile prices and the war in Ukraine have made it significantly more expensive to finance commodity trade, forcing the industry to hunt for an extra $300bn to $500bn in working capital to keep raw materials moving around the world. Changing trade patterns have made the global flow of raw materials less efficient and more costly to finance and are also likely to push up the price of commodities for consumers, according to… McKinsey. ‘Since the end of 2020, we have seen a doubling of the working capital requirements in the commodity trading sector,’ said Roland Rechtsteiner, McKinsey partner and lead author of the report. ‘We could see a similar increase by the end of next year, if [further] changes in trade flows materialize.’”

January 29 – Financial Times (Leslie Hook)
Weekend May 19, 2023

COT on Commodities

Money managers in commodities covering the week to May 16: Hedge funds cut bullish bets across 24 major commodities futures to near a three-year low at 698k lots in wk to May 16. Led by crude oil, gold, silver,#copper and soybeans. In demand were diesel, natgas, corn and softs. via Ole S Hansen @Ole_S_Hansen


COT on metals in week to May 16: Hedge funds responded to gold’s drop below $2k in the week to May 16 by cutting their net long by 10% to a still elevated 131.8k lots. Worse hit silver had its net long cut in half to 13.4k while copper’s 6% selloff drove a 40% increase in the net short to 22.6k, a 10-mth high via Ole S Hansen @Ole_S_Hansen


“Chile’s President Gabriel Boric said… he would nationalize the country’s lithium industry, the world’s second largest producer of the metal essential in electric vehicle batteries, to boost its economy and protect its environment. The shock move in the country with the world’s largest lithium reserves would in time transfer control of Chile’s vast lithium operations from industry giants SQM and Albemarle to a separate state-owned company.”

April 21 – Reuters (Alexander Villegas and Ernest Scheyder)



  • Hedge funds copper’s 6% selloff drove a 40% increase in the net short to 22.6k, a 10-mth high week COT May 16
  • Copper for July delivery advanced by 4 cents, or almost 1.2%, to $3.73 per pound, ending about 0.1% higher for the week. Copper futures did fall below the $3.7 per pound mark in mid-May, the lowest in over five months.
  • Copper found some support and managed a modest recovery off its lows after a sharp selloff this week that has taken the market down to its lowest level since late November.
  • Shanghai exchange copper stocks fell again and have declined for 12 straight weeks which largely offsets 19 straight days of inflows to LME copper warehouse stocks. While the net change in global exchange copper warehouse stocks over the past 2 months is a slight increase, evidence that Chinese industrial inventories of copper contracted this week, combined with the Shanghai stock decline of 15,872 ounces leaves the supply condition in copper minimally supportive.
  • China imported 407,294 tonnes of copper in April, a 12.5% reduction compared to the corresponding period of the previous year. Still, tight limited a steeper decline.
  • Copper inventories at the London Metal Exchange were under 60 thousand tonnes, the lowest since 2005.
  • Chile said this year’s output is estimated to sink as much as 7% after the 10.6% decline in 2022.
  • Talk of oversupply of nickel and zinc ahead creates bearish headwinds for copper prices, but that news is offset by weekly declines in Shanghai aluminum and lead supplies. While some of the weakness in copper prices on Thursday was a simple balancing of an overdone rally, manufacturing data from the US Fed this week certainly sparks concerns of softer US copper demand ahead.
  • The disappointing economic data our of China does not bode well for copper demand. Copper prices have sold off since from disappointing Chinese PMI data (weaker services PMI).
  • The Chilean mining minister indicated the upward revision in their price forecast levels is predicated on a shift into a global deficit condition brought on by 5% plus growth in China.
  • Copper is entering the strongest Chinese demand season of the year. Outside that pressure from fear of a financial crisis which could trip up the global economy.
  • Chile’s state-owned Codelco said the output in 2023 is estimated to sink as much as 7% after the 10.6% decline in 2022.
  • The copper trade is concerned the US will implement fresh sanctions against China and tensions between the US and China could drift toward trade war status.
  • Demand favors the bull camp and supply factors favor the bear camp.
  • “A copper deficit is set to inundate global markets throughout 2023 — and one analyst predicts the shortfall could potentially extend throughout the rest of the decade. The world is currently facing a global copper shortage, fueled by increasingly challenging supply streams in South America and higher demand pressures. Copper is a leading pulse check for economic health due to its incorporation in various uses such as electrical equipment and industrial machinery. A copper squeeze could be an indicator that global inflationary pressures will worsen…” February 6 – CNBC (Lee Ying Shan)
  • “Widespread anti-government protests are disrupting copper output in Peru, the world’s second-biggest producer, triggering predictions of a further surge in prices for the metal which has already rocketed in recent months as China’s resource-hungry economy reopens. Demonstrators demanding early elections and the resignation of President Dina Boluarte have thrown up roadblocks across the country and attacked mines, causing production slowdowns and closures in the Latin American nation’s copper operations, which account for about 10% of global supply.” February 7 – Financial Times (Joe Parkin Daniels and Harry Dempsey)
via Reuters
  • Commodity trader Trafigura and Goldman Sachs last year both warned that global copper stocks have fallen to record lows with current inventories enough to supply world consumption for just 4.9 days
  • Analysts at Goldman Sachs Group Inc. predict copper will hit a record high of $11,000 a ton within 12 months, while BNP Paribas says prices will drop to $6,465 a ton by the middle of next year as the market swings into a huge surplus.
  • Glencore estimates a supply shortfall of 50 million tonnes in 2023.


Copper followed through with its break to the upside out of the pennant through the 50wma after it rebounded sharply off the tenkan and failed three times there in the past month. A bullish weekly hammer formed on copper prices, suggesting demand above $4.00. Rebounding from the two-week low of $3.98 touched on April 4th. The flattening Weekly Kijun acted as a magnet with the cloud twist. We closed right at the bottom of the previous bull flag from 2021. Copper had been a leader in the risk on movement for commodities.

Weekly Copper Outlook
Copper Supply Crunch

Precious Metals

  • Spot Gold declined 1.1% to $1,983 (up 8.7%).
  • Silver fell 1.0% to $25.08 (up 4.7%).

“The World Platinum Investment Council raised its 2023 forecast deficit for platinum to a record high as investors bet on the metal’s supply declining. Platinum consumption will outstrip supply by 983,000 ounces in 2023, WPIC wrote in its quarterly report… That would be the biggest shortfall in records going back to the 1970s, and compares with a deficit of 556,000 ounces the council projected in March.”

May 14 – Bloomberg (Eddie Spence):


Global gold ETFs net inflows US$1.9bn (32t) in March, the first inflows for ten months. However recent inflows were not enough to prevent a net quarterly outflow of US$1.5bn (29t). via @KrishanGopaul


  • Hedge funds responded to gold’s drop below $2k in the week to May 16 by cutting their net long by 10% to a still elevated 131.8k lots.
  • Gold futures for June delivery gained $21.80, or 1.1%, to settle at $1,981.60 per ounce on Comex, with prices for the most-active contract down 1.9% for the week. That was the biggest weekly percentage loss since the week ended Feb. 3, according to Dow Jones Market Data.
  • June palladium gained $73.60, or 5.1%, to $1,523.80 per ounce, with prices tacking on 0.7% for the week,
  • Platinum for July delivery rose by $17.50, or nearly 1.7%, to $1,075.70 per ounce, for a weekly gain of 0.8%.
  • Gold extended downside moves, safe haven support went to the USD with debt ceiling nerves.
  • Gold, and silver ETF holdings this week have declined in sync with futures prices
  • Prior to this week Gold ETF holdings increased 363,091 ounces yesterday (+0.4%), bringing them 0.5% higher on the year. This was their biggest one-day increase since April 2022 and their fifth straight day of growth.
  • Gold surged to $2,072.19 last Thursday, just shy of its record high of $2,072.49, following the Fed’s hint that its hiking cycle may be ending.
  • Gold consolidating its rally over $2000 which started back in the first half of March, and from a technical viewpoint this puts it in a bullish posture. The banking crisis has eased, but it has not gone away entirely, and the pressure to raise rates seems to be softening, despite concerns expressed by Fed members that inflation is still too strong.
  • World Gold Council predictions of softening Indian gold demand in both the June and September quarters. Additional bearish news from the WGC that Indian first quarter gold demand declined by 17% and India scrap gold inventories jumped by 25% in the first quarter.
  • World Gold Council also indicated that global gold demand fell in the first quarter of 2023 despite strong ongoing central bank demand. First quarter gold demand fell by 13% compared to year ago levels and that contraction would have been very severe if central bank purchases of 228 tons were not registered.
  • “Violet Zhu, a Shanghai-based electronic components exporter, has been attending jewellery auctions and chatting on social media forums on the subject this year, looking to invest in rubies and diamonds. ‘I don’t have the brain for stock investments, and I am waiting to redeem mutual fund products once they break even. But in the meantime, I have been continuously buying gems,’ says Zhu. Zhu says she is searching for oddly-shaped rubies of higher grades… She is not alone. Jewellery and precious metals consumption in China soared 37.4% in March from a year earlier underpinning a 13.6% jump for the quarter…” April 18 – Reuters (Winni Zhou and Tom Westbrook)
  • Gold caught the bid with safe haven flows.
  • The bull case in gold fundamental headwinds of rising rates, periodic fears of global slowing.
  • Goldman earlier in March labeled gold as “the” investment hedge of preference and predicting gold to trade to $2050.
  • Gold and silver will continue to see money flows from residual global bank contagion fears but a significant slide in implied US treasury yields this week adds a secondary supportive force for the bull camp.
  • Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and vice versa.

“Traders quip that one of the few things to rally during bear periods is volatility. Add gold to the list. Its price has leapt about 7% so far in March to one-year highs of just under $2,000 per ounce. With investors dumping stocks and corporate bonds, money has flowed into both government bonds and gold. Interest in the yellow metal seems odd, given that price inflation in the US and elsewhere may well have peaked. And gold offers no income to investors… So what explains the renewal of interest? Well, gold does offer a safe haven, particularly for retail investors worried that their money may not be safe in a bank.””

March 24 – Financial Times


Gold Weekly

Gold futures successfully back tested the median after another rejection at the Tenkan (orange) moved towards the flat cloud and twist. Needs to get impulse off this ABC so double bottom gains more weight and it follows silver break higher. The yellow metal is consolidating after it accelerated after breaking the weekly triangle higher. Gold has bounced after support at its uptrend line since the August 2021 bottom and Kijun. To be bullish we need to stay above the triangle. Murrey Math resistance, watch Fibs & Chikou.

PBOC Buying Gold

  • China added to its gold reserves for a sixth straight month, China raised its gold holdings by about 8.09 tons in April, according to data from the State Administration of Foreign Exchange on Sunday. Total stockpiles now sit at about 2,076 tons, after the nation increased reserves by about 120 tons in the five months through March.
  • China’s end-April foreign currency reserves rose to $3.2048 trillion, up by $20.9 billion from the month before, the data showed. Rise in the foreign-exchange reserves was a result of US dollar depreciation and rise in global financial asset prices, the foreign-exchange regulator said in a statement.
  • The People’s Bank of China raised its holdings by about 18 tons in March. Total stockpiles now sit at about 2,068 tons, after growing by about 102 tons in the four months before March. Nations have been building up stockpiles of bullion amid heightened geopolitical risks and high inflation. – Bloomberg April 7
  • PBOC in December added to its gold reserves for a second straight month, adding 30 tonnes of gold worth. Brings China’s holdings to a total of 2,010 tons.
  • PBOC in November added 32 tonnes of gold worth around $1.8 billion to its reserves, the first time it has disclosed an increase since September 2019.
  • China has the world’s sixth-largest official national gold reserves after countries including Russia, Germany and the United States, which is the biggest with 8,133.5 tonnes
  • The World Gold Council (WGC) said in October that central banks globally bought 399 tonnes of gold in the third quarter of 2022, by far the most ever in a single three-month period.
Gold in Perspective



  • Hedge funds responded to gold’s drop below $2k in the week to May 16 hitting silver also, its net long cut in half to 13.4k
  • Silver futures for July delivery rose by 43 cents, or 1.8%, to $24.06 per ounce, for a weekly loss of 0.4%.
  • Silver extended downside moves with dollar strength
  • Silver ETF holdings increased 2.187 million ounces, bringing them up 0.5% on the year. The increases suggest investor interest remained resilient in the face of selloffs.
  • Silver experienced a much more dramatic selloff than gold with a downside breakout to its lowest level since April 4.
  • Silver prices also fell on industrial metals demand concerns after German Mar factory orders fell more than expected by the most in nearly three years.  Metals prices recovered from their worst levels after the dollar gave up an early advance and moved lower. 
  • Silver is mostly missing out on flight to quality buying interest with Gold and the Swiss France dominating.
  • Signs of low supply had supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November.


Silver Weekly Outlook

Silver bounced off the bottom trend line and was energizes in the sphere of influence. Back over 50wma after spitting tenkan, now providing support after reversed. Closing under outer channel which is now resistance. Major support is 50wma and tenkan.

Industrial Metals

The London Metal Exchange at the end of 2022 showed the smallest available warehouse stockpiles in at least 25 years. Available inventories of aluminum fell 72% decline, zinc shrank by 90%.

“After a substantial stretch when battery makers were desperate for mineral supplies, the shoe is suddenly on the other foot. In the past few months, previously red hot cobalt and lithium prices have cooled dramatically. The chill is coming from both sides: supply and demand. Supply bottlenecks are easing while China’s demand for electric vehicles, and global demand for many consumer electronics, have ebbed as well. Cobalt has fallen out of favor the most: prices in February were down 61% from January last year… Lithium carbonate prices rose rapidly for most of last year, but the metal has seen a sharp correction of 21% since November. China’s EV subsidy cut in December is a big factor…”

February 28 – Wall Street Journal (Megha Mandavia)


“Tin jumped the most in nine months after a key mining region in Myanmar, the world’s third-biggest supplier, moved to curtail digging of the material used in electronics and cans. An economic planning committee in a northern area of the country controlled by the United Wa State Army — Myanmar’s largest ethnic armed organization — ordered a general halt to mining operations…”

April 17 – Bloomberg:



  • Aluminum futures closing price of LME Aluminum 3-Month contract stood at USD 2,431.00 per tonne as on 20th April, 2023. The LME Aluminum Cash Settlement contract edged higher modestly from $2,381.00 a day before to $2,410.00 per tonne.
  • The LME Aluminum stocks declined over the previous day to close at 572,275 tonnes on 20th April, 2023, as compared with 573,575 a day before.
  • China’s annual aluminum production in 2022 increased by 4.5% from a year earlier to a record high of 40.21 million tonnes thanks to newly launched capacity and softened power supply constraints. 
  • China has been taking significant steps to boost its economy and end the strict coronavirus-induced regime, lifting the outlook for metal demand and overshadowing global recession concerns.
  • On the supply side, last year’s output cuts at key European smelters, including Alcoa’s San Ciprian smelter and Hydro’s plant in Slovakia, lent further optimism to bulls.
  • Global inventories now stand at just 1.4 million tons, down 900,000 tons from a year ago and the lowest since 2002.

  • Aluminum hit an all-time high of around 4,100 USD/T in March 2022 in the aftermath of Russia’s invasion of Ukraine. Aluminum is down roughly 40% from that record high in March amid persistent fears of a demand-sapping global recession triggered by an aggressive tightening campaign from major central banks.
  • In 2022 Aluminum and zinc on the LME had their worst year since 2018, with prices down 15% and 16%, respectively.
  • Tin was the worst performer, falling by more than a third and registered the biggest annual decline since at least 1990.
  • The world’s top aluminium producer, China’s primary aluminium production in November climbed 9.4% from a year earlier with 3.41 million tonnes as looser power restrictions allowed some regions to ramp up output and as new smelters started operation.
  • China is the biggest producer, accounting for 60% of production, followed by Russia and then Europe and the U.S.
  • On the supply side, LME has decided against banning Russian metal from trading and storing in its warehouses because many traders are still planning to buy the metal in 2023.
  • The car industry is the world’s largest aluminum consumer, with nearly 67 million vehicles per year, according to SkyQuest.

Technical (Alcoa)

We analyze Alcoa as a surrogate to Aluminum given its high beta relationship and more liquid aspect as an investment vehicle. $AA retested the 50Wma and 50% confluence after earnings. From there the Chikou rebalanced it closed under the tenkan. We have support below at 2/8 sphere of influence under the tenkan confluence.


Agricultural Commodities


“From China to the U.S. to the European Union, rice production is falling and driving up prices for more than 3.5 billion people across the globe, particularly in Asia-Pacific – which consumes 90% of the world’s rice. The global rice market is set to log its largest shortfall in two decades in 2023, according to Fitch Solutions. And a deficit of this magnitude for one of the world’s most cultivated grains will hurt major importers, analysts told CNBC. ‘At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,’ Fitch Solutions’… Charles Hart said.”

April 18 – CNBC (Lee Ying Shan)


Lumber prices were a leading indicator of the supply-chain problems and inflation that followed pandemic lockdowns. They are a leading indicator for the strength of the home building industry.

The CME replaced the random length with the physical futures, but they have yet to achieve the critical mass necessary for success. On the final day the old futures contract— ticker LB—traded 12 times on Monday, adding $5 per thousand board feet to end, forever, at $344, about 80% lower than the peak price notched in 2021. The outgoing futures, which represent a railcar full of two-by-fours delivered to the British Columbia interior, are being replaced by a contract—ticker LBR— that sends a truck’s worth of wood to Chicago. The plan is intended to boost trading from untradeable thin and reduce wild price swings and improve the contract as the barometer of wood prices and building activity.

The existing legacy contract is freight on board (FOB) originating in Prince George, BC. It’s a reflection of the mill price of western spruce pine fir lumber, which legacy 110,000 board feet futures contract is derived from. The new mini lumber is FOB Chicago, so the premium of $105 represents the additional from delivering to the mill in Chicago. That’s the reason the premium in the mini. Secondly, the new contract has the ability for producers to deliver western SPF, eastern SPF, domestic and Canadian Doug Fir, and U.S. Hem Fir. Depending on the species and delivering mill, the FOB is anywhere from $80 to $105 premium to the legacy contract delivered to Chicago. Lastly, the new contract is sunset out of existence with the official and permanent expiration on May 15, 2023.

Greg Kuta, the President of Westline Capital Strategies,


  • Prospects of interest rate hikes continued to depress real estate activity. Stubbornly high inflation and a tight labor market have raised worries that the Federal Reserve will keep rates elevated even after the recent turmoil in the banking sector.
  • Fundamentals in the lumber complex had supported tight supplies and prospects of a rebound in-home construction and demand recovery.
  • The legacy benchmark fell roughly 80% since its May 2021 peak of around $1,700, when supply chain issues compounded strong demand when it went off the board at $344.
  • Worth noting that before 2018, the price never eclipsed $493.50.
  • In January 2023, nearby March random-length lumber futures were sitting at the $417.70 level, with the new physical futures at $525.00.
  • In March 2020, random-length lumber futures fell to $251.50 per 1,000 board feet as the global pandemic gripped markets across all asset classes. When commodities exploded higher over the following months lumber rose to $1,711.20 as supply chain and other issues created a shortage. In an almost perfect bullish storm for the lumber market, historically low interest rates caused a housing boom, increasing the demand for lumber when supplies were low. 
  • The Federal Reserve’s aggressive tightening cycle pushed 30-year mortgage rates to levels not seen since 2001, leading to slower home construction and souring sentiment among homebuilders.
  • The war in Ukraine and the tightening sanctions against Russia and its ally Belarus, which account for more than 10% of the global export of lumber, had squeezed global supplies.
Lumber Cash Prices


COT on Grains in week to May 16: In grains, heavy selling of soybeans (-51% to 24k, an 18-mth low) and soy oil (-23k to -36k lots, near 4-yr high) was offset by short covering in corn (+17.6k to -92k) and wheat (+4k to -113k). The KCB wheat long more than doubled to 16.6k lots. via Ole S Hansen @Ole_S_Hansen

For the first quarter of the year, CBOT wheat fell 12.8%, with corn down 2.9% and soybeans down 1.4%.



  • In grains, short covering in wheat (+4k to -113k). The KCB wheat long more than doubled to 16.6k lots. COT w/e May 16
  • Wheat prices were lower to sharply lower in all 3 classes.
  • KC violated support at both its 50 and 100 day MA’s closing at its lowest level in 2 weeks. Next support is $8.00.
  • Chicago July-23 traded to its lowest level in over 2 years. Next support is $5.95 ½, the early May low on the weekly continuation chart.
  • SovEcon raised their 2023 Russian wheat production forecast 1.2 mmt to 88 mmt, well above the USDA forecast of 81.5 mmt.
  • At the conclusion of the Kansas wheat tour yesterday afternoon, participants forecast state production at 178 mil. bu. with an average yield of 30 bpa. This compares to the USDA forecast from last Fri. at 191.4 mil. bu. with an average yield of 29 bpa.
  • Implied harvested acres from the crop tour was 5.933 mil. well below the USDA est. of 6.6 mil. and implies abandonment at 27%. The USDA is already assuming record abandonment at 18.5%.
  • Last week: The USDA isn’t expected to release new crop by class wheat balance sheets until the July-23 WASDE.
  • Old crop wheat ending stocks were unchanged at 598 mil. bu. in line with expectations. The only old crop change was a 7 mil. bu. reduction in durum stocks, offset by higher HRW stocks.
  • All wheat production was estimated at 1.659 bil.
  • Winter wheat production was forecast at 1.130 bil. bu. roughly 90 mil. bu. below expectations.
  • By class production was HRW 514 mil. 74 mil. below est., SRW 406 mil. 10 mil. above est., and white winter at 210 mil. 28 mil. below est.
  • The USDA was aggressive early in slashing harvested acres in the Southern plains. Only 67.4% of the planted WW acres are expected to be harvested, the lowest level in since at least 2007.
  • New crop usage is forecast at 1.837 bil. with ending stocks falling to 556 mil., 50 mil. below expectations and if realized would be a 16 year low. 2022/23 world stocks rose 1 mmt to 266 mmt, slightly above expectations.
  • IKAR forecasts Russian 2023 wheat production in 2023 at 84 mmt, while exports should reach 41 mmt. Their export forecast is down from 46 mmt for the 2022 crop. Most private Russian wheat forecast are running in the mid 80’s mmt, however the Russian Ag. Ministry is only forecasting production at 78 mmt.



Wheat resistance is now the tenkan and the 50 and 61.8% Fibs. It had been drawn higher by the flat weekly cloud which unraveled the shorts which when done we sailed back through 0/8 like butter. The contract keeps failing to stabilize after it continued its sharp impulsive collapse. This came about after a failure at retesting the 8/8 move and high after it spat 8/8, and the minimum target. It had completed a measured 4/8 correction off highs then broke key support at 38% then 50% and 50wma confluence in the freefall.



  • In grains, short covering in corn (+17.6k to -92k) – COT w/e May 16
  • Prices Friday drifting back in sympathy with sharply lower wheat prices. US prices remain $15 – $20 mt over SA supplies despite this week’s selloff.
  • With fresh news scarce, markets appeared to revert back to focusing on weak demand and mostly favorable weather. US will experience below normal precipitation over the next week with the exception of the southern plains. Temperatures will gradually build next week to above normal readings. Favorable for finishing up plantings, however concerning if moisture doesn’t reemerge by late May/early June.
  • Ukraine’s Ag Minister reports grain plantings have reached 86% of the intended 5.5 mil. HA. Overall acres are down from the 5.9 mil. HA from YA. Corn plantings have reached 3.3 mil. HA.
  • BAGE kept their Argentine production forecast unchanged at 36 mmt, vs. the USDA est. of 37 mmt. Harvest is estimated to have reached 25%, vs. 27% YA and 5-year Ave. of 34%.
  • Friday’s Cattle-on-feed report showed cattle inventories as of May 1st were 97% of YA, in line with expectations. Placements and marketing’s were also in line with expectations at 96% and 90% of YA levels respectively
  • 2023 production was est. at a record 15.265 bil. with an average yield as a record at 181.5 bpa.
  • New crop usage is forecast at 14.485 bil. resulting in ending stocks swelling to 2.222 bil. If realized stocks would be the highest in 5 years.
  • 2022/23 world stocks rose 2 mmt to 297.4 mmt, vs. expectations for a 1 mmt decline
  • The USDA is carrying very optimistic corn and soybean production forecasts for 2023/24. 2023/24 world stocks were estimated at 313 mmt, 5.5 mmt above expectations and also a 5 year high. Chinese imports are forecast to rebound to 23 mmt in 2023/24, up from 18 mmt in 22/23 and also above the 22 mmt in 21/22.
  • There remains concern about Russia not extending Ukraine export corridor deal.


Corn Futures Outlook

Corn May-23 closed back above the 100 day MA, while coming within $.00 ½ of the April high of $6.68 ½. However again it remains under the Kijun after the 7/8 fail to close under the weekly cloud and under the 50wma. Earlier in the year Corn had topped out at the highest since 2012 in Chicago at +1/8 and corrected with impulse back to break the Tenkan which it swiftly did a spit of a spit after bouncing off 720, which also the price successfully retested the high from April 2021. From here we saw Tenkan fail again. Which is back where we are. Corn May-23 violating support at $6.45. Next support is at $6.37.



  • In grains, heavy selling of soybeans (-51% to 24k, an 18-mth low) and soy oil (-23k to -36k lots, near 4-yr high) – COT w/e May 16
  • The soybean complex was lower across the board Friday. July-23 soybeans quickly approaching last summer’s low at $12.99. New low today for July-23 meal, next support $397, the Oct-22 low on the weekly chart.
  • Despite this week’s plunge in price, US soybeans remain $40 – $50 mt above SA supplies thru the summer months.
  • Spot board crush margins did rebound $.15 Friday to $1.13 bu.
  • Safras and Mercado raised their Brazilian soybean production forecast .6 mmt to 155.7 mmt, just above the USDA est. of 155 mmt.
  • The BAGE lowered their Argentine forecast another 1.5 mmt to 21 mmt, well below the USDA est. of 27 mmt. Harvest is estimated to have reached 69%, down from YA and 5-year Ave of 85%. Argentina’s Ag. Ministry lowered their soybean production forecast 2.2 mmt to 25.5 mmt.
  • The tightened inspections procedures in Chinese ports are causing port congestion and soybean shortages in certain domestic markets. Inbound vessels are now taking upward of 20 days to clear customs, up from 3–5. These new inspection procedures limited April-23 imports to only 7.26 mmt, well below expectations.
  • Last Week: Old crop soybean ending stocks rose 5 mil. bu. to 215 mil., in line with expectations. The only change in the balance sheet was a 5 mil. bu. increase in imports to 20 mil. bu.
  • Both soybean oil and soybean meal ending stocks were steady however both featured modest import and usage adjustments.
  • 2023 production was estimated at a record 4.510 bil. bu. with an average yield of 52 bpa, matching the record yield from 2016.
  • Usage was estimated at 4.411 bil. resulting in ending stocks growing to 335 mil. bu., roughly 50 mil. bu. above the average est. If verified ending stocks would be the highest in 5 years.
  • Soybean oil usage for biofuel in 2023/24 is forecast at 12.5 bil. lbs. up from 11.6 bil. in 22/23.
  • New crop soybean meal exports are forecast to jump to 14,800 tons, up from 13,800 in 22/23. Old crop 2022/23 world ending stocks rose 2 mmt to 297.4 mmt, above expectations for a 1 mmt reduction.
  • USDA made no change to Argentina’s production forecast of 37 mmt. Brazil’s production rose 1 mmt to 155 mmt.
  • New crop 2023/24 world stocks are forecast at a record 122.5 mmt, above the range of estimates.
  • Brazil’s production is forecast to rise to 163 mmt next year, while Argentina if forecast to rebound back to 48 mmt from this year’s drought ravaged crop.
  • China’s imports for 2023/24 are expected to rise to 100 mmt, up from 98 mmt in 2022/23.
  • US soybean prices remain $90 – $95/mt over Brazil, threatening additional imports.
  • Of the 6.85 mmt of soybeans China imported in Mch-23, 4.83 mmt were from the US, a jump of 43% from Feb. Imports from Brazil fell 42% to only 1.67 mmt as harvest was delayed. Spot board crush margins continue to soften up closing this week at $.84 bu., closing in on last summer low.
  • In an effort to reduce their reliance on huge soybean imports China has proposed a 3-year plan to cut soybean meal feed rations to 13% from 14.5% YA.
  • Brazilian Pres. Lula met with Chinese leader Xi in Beijing last month. In a joint statement the 2 countries acknowledge that cooperation in agricultural trade is strategically significant. Both sides pledged to promote agriculture, trade, and supply chain resiliency while also working to strengthen environmental protections to deal with climate change.


Soybeans Weekly Outlook

Soybeans after it rejected new lows at the bottom of trendline finally got the legs to break above the 50wma, however that has all unraveled. May-23 made a new low for the month, next support is at $14.77 ½. The 50 wma and the tenkan are above the Kijun providing heavy resistance in the cloud. We sit above the January breakup. May-23 soybeans violated 100-day MA support at $14.95 last week. The weekly cloud and Murray mingle around the $14.9/bushel benchmark. May-23 soybeans broke thru the $15 level while also violating support at its 50 MA and settling right at its 100 MA at $14.92 ½.

Recall beans broke down from the bull pennant framed by +4/8 and +1/8 with the Kijun unable to sustain support right at the breakout. Support at the 50wma gave way to under the futures pivot at $15/bushel benchmarks and at the close of the week was a magnet to the recovery bounce. Pressure came from futures spitting the Weekly +4/8 over $17.50/bushel three times. The market needs to rebalance that energy.


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COT in Oil Complex week to May 16: Crude oil selling extended to a fourth week with the comb. WTI and Brent long cut by 17.6k to 267k and near the post-banking and pre-OPEC+ cut low at 241k lots. Improved refinery margins supported a 28% reduction in the gas oil short to 8k while ULSD flipped back to a 7k lots net long via Ole S Hansen @Ole_S_Hansen

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