Market Update; Tuesday, February 5th, 2019
Pre-report trade and improved global weather outlooks weigh on early trade.
Fractional changes in overnight trade has turned into general weakness as volume continues to thin in the market. Many traders have shored up positions and moved to the sidelines ahead of Friday’s release of USDA data. This will again take place during today’s session. A general lack of fresh fundamental news is also keeping trade volume on the light side. Interesting to see that corn has closed in a 5 cent range for the past 12 days. Soybeans have closed in a 10 cent range for 13 days. Traders are hoping we will receive something Friday to break futures out of this range, but it is quite possible it will take until the March intentions to accomplish this.
Corn futures have found some support in news that China has included corn in the import package put together with the US. While this would add to our demand base, trade is worried over ethanol production and what it may mean to total corn usage. Hopes are Friday’s reports will shed some light on this. Corn is also taking support from cumulative loadings that are 298 million bu above a year ago. Any increase in corn values will likely bring an increase to production though, especially in Ukraine. Interesting to see some sizable incentives paid for immediate ship deliveries across the interior market.
Soybean futures are torn between Chinese demand and yearly loadings. China has steadily booked soybeans since the last round of trade talks ended, but not in a volume that would impact ending stocks a significant amount. The fact that yearly soybean commitments are 500 million bu under the needed pace to reach yearly estimates is negating much of the Chinese business. There is talk this morning that last year’s Brazilian soybean crop was underestimated and will be adjusted for this coming Friday. If correct, this will counter some of the decrease that is expected to the current soybean crop. Improved weather in South America is also tempering the complex.
Wheat futures are mostly weaker. A lower export forecast is expected Friday as yearly loadings are only 54% of expectations. Indications that the Russian crop will be larger than initially thought are also weighing on the complex. Losses in the wheat market are being held in check by the technical side, which has established a floor under the futures. Speculation that we will see elevated wheat plantings in the Upper Plains rather than soybeans are starting to pressure futures.
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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