Market Update; Monday, February 25th, 2019
Markets have started the week mixed, with easing export tensions providing support while a lack of actual trade applying pressure.
Trade is sharply divided today with the grains under pressure and soybeans higher. Technical weakness is pressuring the grain contracts, as are concerns over demand. Soybeans are benefitting from the easing of tensions between the US and China on trade, but the lack of a confirmation on any new business is limiting advances. The cash market is supporting futures today as the interior market has been crippled from the weekend blizzard, with more snow on the way.
Corn futures are trading lower today in sympathy of the heavy losses in wheat. We have not seen any demand that is out of the ordinary, IE China, which is keeping buying in the corn market to a minimum today. Trade is also pointing at the corn yield number from last week’s outlook forum of 176 bushels per acre, and how final yield has been above this in each of the past five years. Trade is less convinced we will see an increase in corn acres which is preventing losses from being extended.
Soybean futures are on the positive side as we see speculative buying following the announcement that additional tariffs will not be placed on China at the end of the week. Hopes are this will initiate additional soybean trade with that buyer. Last Friday China said it would buy an additional 10 million metric tons of US soybeans in the future, but the vagueness of this is keeping today’s advances capped. There are also concerns that if China resumes its buying from the US, we will lose out on other buyers interest, and the demand will be a simple wash-out.
Heavy losses are taking place in wheat today from several different factors. A main one is a break-down in technicals. Concerns over a demand, or the lack thereof, is also pressuring wheat. Buyers continue to bypass the US as a wheat source in favor of other offerings. The only factor that is limiting wheat losses today is the projection for a mere 47 million acres of production this coming year, but as with corn and soybeans, that number is highly suspect.
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 gathered 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