Market Update; Monday, April 15th, 2019

Trade has started out the week mixed with corn and soybeans on the positive side and wheat under pressure. Simple short covering is the primary source of market support today, as record shorts in corn and soybeans ahead of planting are a little surprising. Typically, this is when we start to see the addition of risk premium. The lack of it this year is noticeable, especially for corn. Trade remains optimistic that a trade deal will be reached between the US and China following recent talks. Interesting to see that even with less than perfect conditions there was planting over the weekend in Illinois. With more rain and possible snow on the way this week, active planting will be delayed. What is becoming more of a concern than the moisture is the lack of heat units.

Corn planting tonight is expected to come in at 5% which would be about average. Nearly all of this activity is expected to have taken place in the South. The record short position in corn is the best chance of a rally for the complex at this time. It really will not take much and we could see active buying in the complex. Right now, the corn complex has record low unshipped sales on the books which is a little concerning as it verifies our poor demand. This coming from the record competition we are seeing in the global market from Argentina and others. Give the fact China is importing pork it is becoming unlikely we will see any exports to that country.

Soybeans are also benefitting for simple short covering today. Chinese soybean imports in March were a record low for the month, but this may be from tax changes in the country. China is lowering its value added tax which would give importers the incentive to wait and make purchases now. That said, we already have record unshipped soybean sales on the books at 478 million bu. With China taking pork over feed grains this may lead to cancellations of soy bookings later in the marketing year. China buying pork also gives us the indication they are confident a trade deal will be reached with the US. Technicals are keeping a lid on any attempt to rally.

The wheat complex is struggling to generate any buying interest today. The main reason wheat continues to struggle is simple supply as there is plenty of wheat in the global market. While we did see several deals overnight, none involved the US. Wheat is taking some support from the delays to spring seeding in the Plains which cannot just impact acres but yield as well. This will become much more of a supporting factor in the next few weeks.

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 ksetzer@citizenselevator.com . You can also follow Karl on twitter; @ksetzergrains




 

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