Market Update; Tuesday, January 29th, 2019
Lack of fresh news, technical indicators weighing on today's trade.
Trade is on the negative side this morning with wheat and soybeans posting the greatest losses. A break-down in technical support and concerns over demand are the main negative factors on these two commodities. The USDA has announced they will be releasing the February WASDE report on the 8th, but reports on what data will be given out are mixed. The main focus of trade this week is talks between the US and China that will take place tomorrow and Thursday. Early it was thought this would mend damaged relations, but now traders are not so sure. The cash market is supporting all contracts today as bitter cold temperatures are hampering commodity movement and some end users are running low on inventory.
Corn futures are under pressure but holding closer to unchanged than the other commodities. Corn is taking its strength from thoughts we will see higher demand and reduced ending stocks in future supply and demand reports. Renewed support for year around E-15 ethanol blending is also giving corn some much needed support. Advances in the corn complex are being limited by technical resistance and thoughts we will see elevated new crop acres.
Soybeans are under pressure today as we see technical selling across the complex. Trade is not as confident we will see exports as it was yesterday, causing a set back in buying interest. The US and China are meeting this week to discuss trade issues, but even if a resolution is reached, economists claim it will take 1.5 to 2 years for trade to get back to normal. That said, Chinese officials have stated they do not want a situation like we ae seeing in Venezuela, and are willing to avoid it at all costs. The rapid harvest pace we are seeing in Brazil is weighing on the world soy market as more soybeans are now available. This fast harvest has some analysts questioning yield though, as they feel low bushels are the leading cause of the elevated pace. The US and Brazil are now equal on soybean offerings though, which is supporting the complex.
A simple lack of fresh news is weighing on wheat today. There is plenty of speculation that the US is going to see elevated wheat demand as our offerings are the most affordable in the global market, but we have yet to see any actual purchases take place. Wheat is also being pressured by an easing of concern over winterkill as many regions of the US received snowfall ahead of the cold weather that is setting in.
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