Corn and soybeans are under pressure this morning while the wheat market is firm. Technical resistance is weighing on corn and soybeans this morning, as is a general lack of demand. Uncertainty over acres and stocks is adding to pressure on corn and soybeans as well. We are also seeing more concern over the state of the global economy and what it could mean for future demand. There are hopes that easing political tensions in the US will lead to more demand which is limiting today’s declines.
Corn is being pressured by spill-over weakness from the soy complex this morning, but finding support from a firm wheat market. We are also seeing a build in concern over weather in Brazil and what it could mean for the Safrinha crop. Conditions are turning slightly drier in Southern Brazil and this could lead to production losses. South Africa is also claiming drought loss of 16% on this year’s corn crop. The average estimates for Friday’s reports are 91.3 million corn acres and 8.34 billion bu of stocks as of March 1st. If this acreage number is correct, the US will need record yields to maintain our current carryout supply.
Soybeans are struggling with technical weakness today, as well as worries over demand. Even if China would buy their normal volume of soybeans from this point through the end of the marketing year our total sales would still fall 300 million bu short of expectations. The likelihood of elevated soybean acres this year is also pressuring the market. The average estimates for Friday’s USDA reports are 86.17 million acres and 2.68 billion bu of stocks. Nearly all analysts expect the actual soybean acreage number to be higher, the question is how much.
Simple short covering is supporting the wheat complex this morning. Wheat values have been pressured for an extended period of time for the same fundamental reasons, and this is losing its impact on trade. We are also seeing more attention to the acreage estimates for the Dakotas. It is quite likely we have not seen the worst of the flooding for the Red River Valley and wheat acres will be impacted. Advances in wheat are being held in check by the fact the US needs to remain competitive in the global market, and this includes freight, which currently favors Argentine wheat over ours. The average wheat guesses for Friday are 47 million acres and 1.56 billion bu of reserves.
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 800.858.3738, extension 411, or at firstname.lastname@example.org . You can also follow Karl on twitter; @ksetzergrains