Market Update; Monday, January 28th, 2019
Commodities start the week under pressure from a lack of fresh news and losses in the finanicals/energy markets.
Commodity futures have started out the week under pressure as we see selling in each complex. Sharp losses in the outside markets, mainly the financials and energies, are weighing on commodities as well. Trade is keeping a close eye on US/China talks this week as the two parties are expected to sit down Wednesday and Thursday to see if a resolution can be made on export issues. If not, many analysts believe the tariffs that are expected to take place on March 1st will become a reality. The government is open again and trade is anxiously awaiting the USDA to see if we start receiving timely reports again.
Corn futures are being pressured by a general lack of fresh news and lack-luster demand. The greatest concern on corn demand is ethanol where yearly production is 3% behind a year ago. In turn, this means less corn demand. Thoughts we will see upwards of 3 million more corn acres this coming year in the US are also weighing on the market, even though this is being heavily debated. Current economics do not indicate an increase in corn acres, and in fact, point more towards fewer corn acres. Losses in corn are being held in check by weather in South America and how production loss is thought to be taking place.
Soybeans are under moderate pressure to start the week as weekend rains in Brazil were on the high side of expectations. Most analysts now believe the Brazilian soybean crop will total between 115 and 116 million metric tons this year. While this is a sizable reduction from initial projections, we will need to see Brazil’s soybean crop dip to 110 million metric tons before it would significantly impact world balance sheets. Soybean harvest in Brazil is approaching 12% complete, which is elevating their new crop exports as well. Soybean losses are being held in check by a potential decrease in new crop acres.
Wheat losses this morning are being credited to a lack of demand and sparse fresh news. Elevated sales pressure out of Argentina is also weighing on the wheat complex. Russia is expected to cut back on exports this year though, which is supporting the wheat complex. Concerns over winterkill in areas of the US without snow cover are also supporting the wheat complex today.
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