Market Update; Wednesday, February 20th, 2019
Technical weakness and lack of export interest are pressuring futures trade to start the day.
Trade is mixed to start the day with soybeans and wheat posting solid losses while corn is trying to hold closer to unchanged. Much of this is technical as yesterday’s breakdown in support is again weighing on soybeans. Greatly improved weather conditions in South America that will limit additional production losses are weighing on the entire market. Trade continues to closely monitor the talks taking place between the US and China with little confirmation of a resolution in sight. More attention is starting to be placed on US weather models as we approach the spring planting season. Any delays to planting will likely reduce the chance of elevated corn seedings.
Corn is finding support this morning from hopes of elevated demand once the trade dispute between the US and China passes. China has indicated it is in need of corn and possibly ethanol as well. Concerns over what will take place to reserves in the US if we do not see an increase to corn plantings this year is also supportive. Corn is being limited by losses in outside markets and near perfect growing conditions in Brazil for the Safrinha crop. Thoughts are this crop will be 21% larger than a year ago.
Technicals broke down in the soy complex yesterday and this pressure is spilling over into today’s trade. There are also thoughts that given recent improvements to Brazil’s weather we have seen the smallest crop estimate of the year down there. Trade is keeping an eye on Argentine weather though, as conditions have turned dry in that country. This is when last year’s drought developed that cut the size of Argentina’s soybean production by 15 million metric tons. While it does not appear as though this will be repeated, the possibility is worth monitoring.
The greatest losses are being posted in wheat this morning where no buying interest at all has surfaced. A concern in wheat is demand, or the lack thereof. The US has plenty of wheat to market and is competitively priced, but buyers remain absent from the market. Losses in wheat are being held in check by concerns over the Australian crop which is expected to be the smallest in the past several years from drought.
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
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