Market Update; Wednesday, January 30th, 2019
Month end positioning squaring and weather are dominating today's trade.
Trade is narrowly mixed today across the board. Month end positioning is the primary factor in today’s trade with little real shift in fresh fundamental news. The technical picture is giving us mixed signals today as well. The most talk in the market today is on weather and the bitter cold that is impacting the Midwest. Basis values are firm on the limited country movement this weather has caused, but the fact many buyers have shut down rather than push for bushels they will not receive is limiting basis strength. This is especially the case for ethanol where margins are in the red to start. Soybean crushers are more willing to extend bids to capture current margins.
Corn futures are posting moderate advances this morning as weather concerns in South America have shifted from soybeans to corn. Early harvest has started in Southern Brazil and yields are less than hoped for. That said, early harvest in this region does tend to be on the light side. South Africa is also reporting a smaller corn crop this year, adding to complex strength. Corn traders are also expecting to see higher corn export forecasts in the upcoming supply and demand reports. That said, we may also see a decrease to ethanol demand, simply off-setting each other.
Soybean futures are basically treading water this morning with little real interest in the complex. The poor demand we have seen to soybeans this year and likelihood of decreased export figures in future balance sheets is weighing on the complex. That said, the US may see elevated demand to soy products, giving the market support. China is also shopping for alternative oilseeds, which may end up bringing more demand to the US from non-traditional soy buyers. Ongoing concerns over swine flu in China are weighing on the complex and will for some time.
Wheat futures are showing a little strength this morning as well. Wheat keeps getting whip-sawed and likely will for the next several weeks, if not months. The US currently has the cheapest wheat in the global market, which has generated hopes we will see elevated demand. This is being countered with freights costs though, which have pushed the US out of the running as a source. Conflicting reports on the condition of the winter wheat crop are also bringing us mixed trade in the complex.
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