Trade was mixed to start today’s trade with corn and soybeans under pressure and wheat firm. Much of what we are seeing in the market is simple consolidation. Questionable demand given the lack of a trade-deal confirmation between the US and China is weighing on the entire market. We are seeing some support from the weather in the Midwest that will likely lead to planting delays, and possibly to lower yields. It will still be another week or two before this become a significant market factor, however. A simple lack of fresh news and technical resistance is weighing on futures as well.
Corn futures are holding mostly steady today with a lack of fresh news and limited trader interest giving us lethargic trade. Trade is talking about the huge draw in ethanol stocks last week that totaled 799,000 barrels. This is a direct result of the logistic issues in the Midwest that are preventing ethanol from reaching terminals. While a significant draw, US ethanol stocks are still 6% higher than a year ago. Hopes that China will resume DDG imports in a trade deal are giving the complex some much needed support. Without fund buying it will be hard to post gains today.
The soy complex is under pressure from a general lack of buying interest and the failure to hold above technical support. Speculation that we will see additional soybean acres this year given Midwest weather is also weighing on the complex. The fact that US soybean carryout this year will be twice that of a year ago will keep a lid on all rallies in the soy complex. We are seeing some conflicting soybean demand figures that are preventing gains in the market as well. The USDA believes China will import 105 mmt of soybeans this year, while Chinese officials are only projecting 91 mmt of soybean imports. Until soybean demand picks up, the complex will remain pressured.
Wheat futures are separating themselves from the other commodities and posting slight gains this morning. Planting delays to the spring crop and concerns over what impact the Midwest weather is having on the winter crop are providing market strength. Low prices have also started to attract more demand. The problem with this is that if wheat values rally, this demand will halt as fast as it appeared. The simple fact that wheat values have been under pressure for too long is giving the complex support as well.
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