Technical short covering was a prime factor in the overnight recovery we had to commodity futures, as were hopes of improved trade relations. Delegates from the US and China are meeting in Washington today to try and resolve the remaining issues between the two countries. Hopes are this will benefit all commodity demand, including corn. Overnight advances were held in check by reports that African Swine Fever has been discovered in Japan. The need for the US to remain competitive in the global market is also limiting price potential at this time.
Corn is taking support from thoughts China will make imports from the US once trade differences are settled. While this is possible, until the demand can be proven, gains will be restricted. The fact that corn exports tend to peak at this time of the year is also capping our daily gains. Competition may only increase in the global corn market as the Brazilian crop is expected to be 13 million metric tons larger than a year ago due to improved weather. The US did see good overnight demand though, with South Korea making a purchase and India showing interest in purchases.
Soybeans were also on the plus side overnight, taking support from technical buying. The soy complex actually has very little fresh supportive news, so fundamental help will be hard to find today. The main pressure point is that Brazilian offerings are well below those of the United States, and for buyers such as China this spread only widens once tariffs are added on. Soybeans may also find pressure in the global market if Canada cannot resolve its trade issues with China. Hopes are this may open the door for US sales, but given current price spreads, that does not seem likely at this time.
The wheat complex is leading the market today. As with the others, this is mainly from technical short covering, as the grain has very little fresh fundamental news at this time. The main points of pressure are the highly rated winter crop and possibility of larger global production. Given the trade issues with Canada and China, Canadian farmers may plant a reported 10% more spring wheat acres. US wheat did find more demand in the global market for both milling and feed purposes.
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