Market Update; Thursday, February 28th, 2019
Trade starts the day in the red on a lack of interest and month end positioning.
Futures have started the day session under pressure as we see selling develop across the board. Heavy deliveries against the March contracts are weighing on futures trade. We are also seeing a much less optimistic outlook on exports following the talks between the US and China. While China has agreed to make purchases from the US, details are a little sketchy at this time. A breakdown in talks between the US and North Korea are also casting a negative wave through all markets. Losses are being held in check by the fact commodities are already at historically low levels.
Export sales on corn were in the light side of expectations which is weighing on the complex this morning. There are hopes that E-15 will be approved for year around use, which some analyst believe will support corn values. Research shows this will only add 75 million bu of annual corn demand though, which really is not a big factor in today’s market environment. A greater concern is the fact current yearly use of corn for ethanol is down 3.2% from a year ago.
Soybean sales last week were over twice the expected amount, but this is having little impact on futures. This is from the poor demand we are seeing on soy meal. This is expected to change though as ethanol manufacturing decreases and so does competition from DDGs. Soybean values continue to be pressured by the large inventory of product in the global market, and the simple fact the world is producing more soybeans than it is consuming right now. It appears as though the Brazilian crop has stabilized after recent weather improvements. Attention is now on the Argentine crop where some yield losses are being reported.
Wheat values are also in the red today with little interest being shown from the buying side. As with soybeans, global wheat production is rising. US wheat is competitive in the global market, but not the cheapest, which is restricting buyer attention. One benefit for wheat is that its technically over-sold. This is keeping fresh selling interest to a minimum.
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