Morning Comments; Monday, February 25th, 2019

Grains are trading mixed on the overnight session.

The markets reacted Friday in their normal fashion lately to the USDA’s outlook forum balance sheet projections for 2019. Corn balance sheets look to tighten using trend line yield and demand assumptions. Some of the lack of enthusiasm is that the USDA has fell short of final yield by over 4 bushels per acre each of the past five years. Since 2004, the USDA forecasted yield has fell short of the final number 60% of the time. Weather always remains the wild card for yield and that can vary greatly over the next 11 months until the final production number released in January. Traders are questioning corn demand as exports have been robust earlier in the marketing year, but now have begun to fade. Corn exports are now a meager 30 million bushels ahead of the year to date figure from a year ago.

After the close Friday, U.S. Secretary of Agriculture Purdue announced that China had committed to purchasing another 360 million bushels of U.S. soybeans. This came after a meeting with a Chinese delegation with officials in Washington, D.C. Another good faith effort by the Chinese, but no word on any further advancement in negotiating trade sticking points, such as intellectual property rights. News sources have yet to provide unanimous results that would indicate a trade deal is close to being completed. A tweet from President Trump Sunday evening indicated significant progress and that the U.S. would delay the increase in tariffs proposed on March 1 assuming progress continues with negotiations.

The U.S soybean export program is a bit muddled as one looks at the numbers after the USDA has played catch up with weekly sales reports following the government shutdown. Some of the recent Chinese purchases were reported as less than previously announced. At a minimum, exports are lagging close to 300 million bushels. If Friday’s sale announcement of more U.S. soybeans occurs, it could help get the balance sheet closer to being accurate. Nevertheless, the fact remains the U.S. still has the largest soybean carryout seen at over 900 million bushels.

Market Movers: Chinese trade negotiations, acreage debate and export business.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.




 

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