Corn and soybeans started today’s trade under pressure while wheat held to advances. Much of what we are seeing in the market is little other than positioning ahead of Friday’s USDA reports. Technicals are playing more of a role in price discovery at the present time as fresh fundamental news is sparse. Trade talks are expected to resume between the US and China tonight, although little progress is expected given the issues that are holding up a full resolution. China has stated they wish to expand grain and oilseed imports by 20 million metric tons by 2022, and hopes are the US will garner a share of this business. Expect to see pre-report position squaring increase during today’s session.
Corn futures are under moderate pressure today as fresh buying interest is non-existent. A general lack of fresh news and technical resistance are adding to the negativity in the corn complex. This combination is keeping corn futures rangebound at best. Trade is expecting to see a 2 million acre increase in corn plantings from last year in this Friday’s report, which is also tempering buying interest. While this number is not considered realistic, the thought is enough to keep buyers on the sidelines. Beneficial rains are falling in Brazil, benefitting the Safrinha crop, and easing worries we had over weather yesterday.
Soybeans are under the greatest pressure today as fresh selling had been uncovered in the complex. Trade is obviously not expecting to see a positive outcome from the trade talks between the US and China tonight. China has shown no interest in our soybeans recently, and this is not expected to change with Brazil offering soybeans at a discount to the US. There are hopes that the trade issues between China and Canada will bring some business to the US, but this seems to be a slim chance at best. The real question in the soy complex is how a bullish story can be built given the current fundamental outlook.
Wheat is showing some strength this morning as global demand has started to surface for that commodity. This includes a sale to Egypt that gave the complex its support during yesterday’s session. We are hearing mixed reports on spring wheat acres. Some analysts believe wheat plantings will be up given expected delays to corn plantings in the Midwest. Others claim the heavy snow cover that has yet to melt will cause an abandonment of acres in the Plains. Every time wheat tries to rally it is met with fresh selling though, which weighs on the complex.
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