Market Update; Friday, January 25th, 2019
Consolidation is giving us mixed trade ahead of the weekend.
Trade is mixed as we close out the week, with corn and soybeans higher and wheat under pressure. Consolidation ahead of the weekend is the primary reason for the mixed trade, but conflicting outside markets are also causing two-sided trade. Trade is also becoming less optimistic on a near term resolution to the US/Chinese trade dispute.
Questionable demand is starting to weigh more heavily on corn futures. This is mostly from ethanol where production was down 20,000 barrels a day last week, while stocks still managed to increase 150,000 barrels. Even with this questionable demand interior corn basis is firming due to slow country movement from weather related issues. Yesterday the International Grains Council increased the world corn crop by 3 million metric tons. Argentine officials are claiming this year’s corn crop is in much better condition than a year ago, giving the idea the crop will be larger.
Soybeans are showing some strength this morning on the heels of decreased global production estimates. The IGC has decreased world soybean production by 4 mmt, and believes it will eventually be even smaller. Advances are being limited by demand worries though. It is believed that China has bought 15 cargoes of Brazilian soybeans this week as the country continues to bypass the US at all costs. Data shows that 2018 US soybean sales to China were just half of what they were in 2017. Speculation that new crop acres may be larger than last year is also capping soybean advances.
Wheat values are under solid pressure today as trade becomes less optimistic we will see elevated demand that was predicted earlier in the week. The IGC raised the world wheat crop a large 8 mmt which is adding to the negativity in the complex. That said, US and Russian wheat are nearly equal in value which should boost US demand. A rising global wheat market is also supporting US values.
This commentary is the sole opinion of Karl Setzer. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is used from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to contact Karl Setzer at 517.541.1449, extension 411, or at ksetzer@citizenselevator.com