Market Update; Monday, February 4th, 2019
Grain trade starts the week under pressure as buying interest wanes. Soybeans show some strength folling an uptick in demand.
Trade has started out the week mixed with little real interest being shown from buyers or sellers. Futures finished last week with corn down 2 cents and soybeans off 7 ½ cents as technical support gave way on both commodities. Wheat futures managed a 4 ¼ cent gains though as buyers showed more interest in that commodity. Weekend weather was favorable in South America with rains moving through Brazil and Argentina drying out. We are starting to hear of some concerns over the state of the global economy and what it could mean for commodity demand, which is limiting speculative buying at this time.
Corn futures are following through on last week’s declines this morning as technical support in the complex simply cannot hold. Global corn production stories are hindering corn more than anything today. Reports of larger corn crops in Argentina and Russia are weighing on corn futures, as are thoughts the South African crop will be larger than expected. Additional pressure is coming from the rapid seeding pace on Safrinha in Brazil. This is giving trade the indication that weather might not be as bad as reports indicate. If conditions were not favorable farmers would hold back on seedings. Corn losses are being limited by thoughts we will see fewer acres shift from soybeans than initially thought.
Soybeans are holding closer to unchanged today as we see less selling pressure. News that China has booked soybeans from the US is providing the complex support as well. A reported 612,000 metric tons, or 22.4 million bu, was booked from the US. This is in addition to the sales that were announced last week. We did see soybeans take out major resistance last Friday but failed to turn this into support, causing most of the gains to be given back. Interesting to see Russia has stated that they may limit Brazilian soybean purchases due to unapproved pesticide use. In all reality this seems more like an excuse to bypass Brazil in the import market. Nonetheless, this could open the door for more US exports.
The wheat complex is favoring the downside today as well on a simple lack of interest more than anything else. Russia has started to reduce wheat export volumes which is benefitting our futures. China has also agreed to buy US wheat in the latest round of trade talks. The fact the US has plenty of wheat to fulfill these needs and still cover domestic demand is limiting any strength in the complex.
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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