Market Update; Monday, March 4th, 2019
Export hopes and technical buying supports trade to start the week.
Trade started out the week on the positive side with the most advances being posted in the soy complex. Soybeans are taking support from the progress that has been made on the trade dispute between the US and China, and how an end to the situation may be close at hand. There are some concerns, however, that the failed talks with North Korea may impact the talks between the US and China. Trade is also closely monitoring developments with Mexico and how they are jeopardizing the “new” NAFTA agreement. The grains are following soybeans but at a distance, especially wheat. This is from concerns the US may be over-priced in the global market on these offerings.
Corn is posting a moderate rally today as we see light buying to start the week. Rumors that India is looking at the US for imports is benefitting corn this morning, as is technical support. Building concerns over the start of the Argentine crop and the likelihood of planting delays in the US are also supporting corn values. Corn is being held in check by worries over domestic demand as February ethanol usage trailed last year by 40 million bu. While not a significant amount, it does not warrant any increase to usage at this time. Thoughts that the Brazilian Safrinha crop will be larger than initially projected are also capping the corn recovery.
Soybeans are the well-defined leader today, taking support from hopes the US/Chinese trade dispute may be resolved. The February crush data shows record soybean usage for the 18th consecutive month which is also supportive. Reports that China’s soybean demand will drop 5% due to ASF are starting to limit soybean values, as is data showing China has all of the 10 mmt of soybeans they said they would buy is covered. Interesting to see projections for a hog population decrease of 30% this year due to disease. The probability of higher soybean plantings than projected by the USDA is also limiting soybean potential today.
Wheat futures have tried to rally today but are struggling to do so. The greatest limiting factor for wheat remains demand, and how the US is struggling to stay competitive in the global market. The US was the leading bid in the Iraq tender this morning, but was undercut in the Saudi Arabian tender by the EU. While it seems hard to believe by looking at wheat futures, there are concerns over global production issues that are supportive today. This is mainly the drought losses in Australia.
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