Market Update; Friday, March 1st, 2019
Lack of interest and concerns over demand pressure trade to start the month.
The market is mixed going into the weekend with little interest being shown by either side. Fund buying is minimal, and most of the activity we are seeing is simple short covering. We are starting to see more interest on spring weather conditions as corn planting gets underway in the deep south. Active corn planting has been taking place in Texas, but this has stalled in other regions due to heavy rains. Given the deep snowpack in the North and unseasonably cold temperatures an early start to spring planting is not expected. It is beginning to be harder to justify an increase in corn plantings with these conditions.
Corn is again weaker today as any interest in buying is minimal. For the week May corn is down 13 ½ cents and there is no indication this will be recovered. Trade is not optimistic on Chinese demand which is preventing any speculative buying from taking place. Abundant world corn reserves and a spread that is starting to favor wheat usage is also pressuring corn futures.
Soybean futures have been on both sides of unchanged today but are struggling to maintain advances. The soy complex simply does not have enough bullish news to maintain a recovery at this time. The greatest strain on soybeans is the price spread between the US and South America. Brazilian soybeans are currently being offer at a 20 cent discount to the PNW and Argentine soybeans are 50 cents under the PNW. It will be hard to gain market share with these spreads. A sizable $1.00 crush margin is supporting soybeans in the domestic market. For the week May soybeans are down 7 cents.
Wheat continues to flounder with little real interest being shown by either side. For the week the May contract in Chicago is off 35 cents, dropping cash wheat to its 3rd lowest value in the past 10 years. While these low values would be expected to bring demand, so far that has not been the case. The wheat market simply needs to find a value that will buy in demand, and we are not there yet.
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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