Market Update; Wednesday, January 9th, 2019
Corn, Soybeans, and Wheat benefit from strength in outside markets.
Trade is on the positive side today as we see commodities take support from the outside markets. A rebound in the energy complex is supporting commodities, mainly in crude oil. Crude has been closely following corn and vice versa, so a bounce in corn is not coming as a surprise. Corn is also taking support this morning from increasing doubt over the size of Brazil’s Safrinha crop. It is thought this will be smaller than initially predicted as dry conditions persist in that country. That said, we did see widespread rains move through many parts of Brazil in the past few days, but others remain in need of moisture. Reports of poor condition on early planted corn in Argentina is also giving the complex some support. Corn values are being held in check by concerns over ethanol demand and how total usage may be overestimated by 200 to 300 million bu. If correct, this could negate much of the potential demand we could see from lower global production. Soybeans continue to build on reports of fresh Chinese buying. While this is all rumors, the freight market indicates it is likely at least some business has been done. The big picture shows us that total Chinese soybean purchases from the US are still down 80% from normal though, so sales would have to be substantial to cover our building deficiency. With Brazilian soybeans being offered at a 15 to20 cent discount to the US this may be a hard feat to accomplish. Wheat futures are also higher today, taking support from the other grains as well as stronger technical indicators. Low quality wheat from other sources in the global market is giving the US market support as well. Wheat advances being limited by thoughts acres will increase in the Plains this year as returns are expected to be better than for other crops, mainly soybeans. Acreage on a whole is impacting all commodities and will become more of a factor as we approach spring. Trade also closely monitoring the government shut down and how it may end up impacting the markets if it continues.