Market Update; Thursday, January 31st, 2019
Global weather imapcts markets as trade awaits news on US/Chinese talks.
Two-sided trade is taking place as we start the last day of the month. Mixed technical indicators are the primary cause of this, although fund positioning is more of a factor. All commodities are being pressured today by building concerns over the global economy and what it could mean for commodity demand. Trade is monitoring US/Chinese trade talks that are in day two. So far, no indication has been given on the success of these. South American weather is giving the market support as even though rains have moved through the country in the past few days, much of the precipitation has fallen in low production areas.
Corn futures are struggling today as technical support has given away to fresh selling. The spot contract did close above resistance yesterday but this has failed to hold. Corn is also struggling from low production data on ethanol. What is more concerning is that ethanol reserves continue to build while production drops. Corn is still finding support from decreased production estimates coming out of South America. Not only are early yields on this year’s initial corn crop, but concerns are surfacing over possible double cropping acres as well.
Soybeans are holding onto the positive side as weather concerns are again surfacing over the South American crop. This is being heavily debated though, as even if production is down as some analysts believe, it will still be more than enough to cover needs. Next week’s weather is forecast to be better for the crops though, which is tempering advances. News that the EU is buying biodiesel from Argentina rather than the US is also capping any attempt at a rally.
Wheat is on the plus side this morning as cold weather continues to generate ideas of winterkill in the plains. Excessive heat in Australia is cutting into wheat production there which is giving the complex support as well. Concerns over US wheat demand has capped that market this morning.
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
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