Consolidation is the primary factor that is going to drive today’s session. The market has fully digested the news that was released this week and is now looking for new factors for price discovery. This may not be until May when the initial new crop supply and demand data is released. Trade is still trying to determine what impact this week’s blizzard in the Plains may have had on plantings and acres this year. As of right now, this appears to have been more of a factor on wheat. There is another system in the forecast though, and this one may be the one that generates more talk on corn planting delays.
Corn was close to unchanged in the overnight session and under mild pressure to start the day trade. Traders are mostly shoring up positions and waiting to see what the next weather system event brings to the Midwest. We are now getting to the point where rains will start to delay corn planting more than they have to this point. Many analysts are expecting to see a decrease to corn acres this year, but the amount is questionable. History shows us that corn acres have only decreased from the March intentions four times since 2000. Demand is the big factor in corn though, as it appears as though usage is still being over-stated.
Soybeans are trying to hold close to unchanged today, but struggling to hold any advances. Soybeans are now below technical support, which has turned into resistance. The main negative factor for soybeans is the same as with corn, that being demand. China booked a reported 8 cargos of soybeans from Brazil this week as the price heavily favors that source over the US. In fact, this spread between the US and Argentine soybeans is wide enough that US imports would make economic sense for coastal crushers. Census data shows us that Chinese imports of soybeans on a whole in the 1st quarter of this year is down 14% from a year ago. This is a direct result of the ASF impact on Chinese feeding.
Wheat futures are favoring the downside today as we have a simple lack of buying in the complex. Trade is trying to determine what the impact of this week’s storm has been on the Winter Wheat crop, and what it could mean for the planting of the spring crop. Data shows us that delays to the planting of the spring crop do in fact reduce yield, but the amount is variable. As with the other commodities, wheat is suffering from a lack of demand more than anything. The fact that wheat, along with all other commodities is oversold, is preventing additional losses.
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