Market Update; Wednesday, March 6th, 2019
A lack of fresh news and renewed concerns over global trade are limiting trade interest this morning.
Commodities are under pressure to start the day as little interest is being shown in covering short positions. Updated trade reports show funds are holding larger short positions in corn and soybeans than thought, which is giving us a negative reaction. Reports that any trade deal with China that is not perfect will be rejected is also weighing on trade this morning. We are seeing light support from early concerns over US weather heading into the spring planting season. While things can change quickly, current conditions do not point towards a timely start to the planting season.
While on the negative side, corn futures are holding closer to unchanged than the other commodities. This is mostly from current weather conditions and how plantings are being delayed in the South. This has already generated talk of acres shifting from corn to alternative crops. Corn loadings are also a concern as shipments are slowing at a time when they typically increase. Chinese officials have also indicated they will pay out heavier subsidies for soybean production than corn this coming year, showing they have adequate corn reserves.
Soybeans are faltering from fund selling this morning as we see technical weakness in the complex. The distinct possibility of elevated soybean acres from estimates due to weather is also pressuring the complex. Losses are being held in check by news China will lower its value added tax on soybeans, which will in turn benefit crush margins. As a result, this could easily generate more soybean demand. The question is if these soybeans will be sourced from the US if trade issues are not resolved.
Wheat futures are suffering the greatest losses today, with pressure coming from ample world reserves. Even with regional production issues the world wheat inventory is more than adequate to cover needs. US wheat ratings are mixed, but above the five-year average, which is also weighing on futures. Wheat losses are being limited by heavily oversold technical indicators that are reducing fresh selling interest.
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