News Source: SETZ

Weekly Market Review; Friday, May 3rd, 2019

Low Prices Prevent Expansion

There is an old market adage that “low prices cure low prices.” While it is premature to say that low prices have cured our depressed markets, there are signs that they are in fact doing their job. Farmers in South America are already starting to make plans for next year’s acres, and low futures are discouraging expansion. If soybeans are not above $9.50 farmers do not expand acres near as much as in years when they are higher. That is not to say that we won’t see additional soybeans planted, just that expansion will be minimal.

In turn, this means fewer soybeans for the United States to have to compete with in the global market.

The spread of African Swine Fever remains a predominant market factor, both domestically and globally. So far, the disease has caused a reduction in China’s hog herd of a reported 40 million head. This equates to roughly 30% of China’s hog herd. Economists believe this will lead to an increase in pork prices in China of 70%. While this is possible, the actual total will depend heavily upon imports, and if these can satisfy demand.

The knee-jerk reaction to this story is that it would be bullish for the US market, both for pork and feed grains. While Chinese demand will in fact help support the US market, the long-term impact may be neutral at best. This is from the fact the US can only produce and export a set volume of pork in a year. If China buys and drives up pork values, we will undoubtedly see other buyers back away from our offerings.

It is also unlikely that the increase we will see in pork exports will compensate for the feed grains we currently export to China.

One non-traditional buyer that analysts are watching the closest is the Philippines. We have started to see Philippine imports of feed grains as the country expands its pork and poultry industry. While it is doubtful they will be able to cover all of the expected loss in business with China, even a portion of it would be beneficial to market values.

Market analysts are starting to more closely monitor domestic commodity demand. This is mostly on feed demand for corn as the current rate of usage does not support our yearly projection. The USDA believes 5.3 billion bu of corn will be used for feeding this year. In order for this to happen we will need to see a record 1.2 billion bu of consumption this quarter, which would be a 30% increase from the same quarter a year ago. This seems unlikely as last quarter’s corn usage number was down 21% from a year ago.

For soybeans all attention is currently on crush. So far this year the United States has crushed 1.17 billion bu of soybeans, this is up 4.4% from a year ago. While this is positive, we may only see a total increase in soybean crushing of 45 million bu on the year. This is because crushers are already running at full capacity to capture high margins and there is little room for expansion.

There is just as much unknown in the global balance sheets right now as there is on the domestic side. The main area of interest in on Canadian wheat plantings. Canada and China re in the midst of a trade dispute, and China has banned some Canadian canola imports as a result. In turn, Canadian farmers are going to cut back on canola plantings by 10% this year as they are concerned with demand outlooks. It is believed Canadian farmers will plant wheat instead, which is not what that market needs given current global stocks.

Another region in the world being closely monitored is South America. Normally we see trade focus on South American soybean production, but right now the attention is on corn. South American countries have experienced near perfect weather conditions to finish out their growing seasons, and field scouts have raised their crop forecasts as a result. It is now believed South America will produce 149 million metric tons of corn this year; 30 million metric tons more than a year ago. This is the equivalent of adding 1.2 billion bu of corn to the world corn supply.

There is another story developing in South America that is starting to garner market attention. This is soybean quality, mainly in Argentina. Argentine soybeans are reportedly lower in protein this year than most, as experts claim the crop was not stressed. Research shows that soybeans tend to have higher protein content in years with stress during the growing season. If this is an ongoing issue, it could limit what an importer is willing to pay for Argentine offerings, and favor the Us in the global market.

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

Market Update; Friday, May 3rd, 2019

Consolidation is taking place across the commodity market today as funds realign themselves ahead of the weekend. There is not a lot of fresh news for the market to work with today, which is limiting movement so far. We are starting to see more concern voiced over the slow planting pace on corn and outlooks for more rains in the forecast. Cold temperatures are also becoming more of a market factor. These factors have started to draw comparisons between this year and the major flood year of 1993. The cash market is firming as country movement remains light, especially following the set-back in values we have seen.

Trade is fully expecting the corn planting pace on Monday to be well behind average. Normally we see corn planting at 46% by Monday, but this year it may be no more than 25%. This has some analysts looking at 1993 when planting was also well behind average. That year the final corn yield was just 82% of trend according to research from FC Stone. If correct this would put corn yield this year at roughly 144 bushel per acre; a number that would cause a sharp tightening of our carryout numbers. The real unknown factor with corn is what impact weather will have on acres. A reduction to both yield and acres will be a major concern for the corn complex.

Soybeans are again under pressure as we simply cannot find a bullish story to build on. Weather is not as much of a factor for soybean production, and in fact, delays to corn planting are actually bearish for the soy complex. This is from the fact we will likely see higher soy acreage numbers if wet conditions persist. We are also seeing comparisons between this year and 1993 for soybean yield, with less of an impact. According to FC Stone the soybean yield in 1993 was 7% under trend. Given the current yield estimate, this would put our final yield this year at 46 bushels per acre, which is more than enough to satisfy demand. Given the fact new crop soybeans are at the lowest level in 12 years we may not see much more market pressure at this time.

Wheat futures are setting back today as we see little fresh buying interest in the complex. Wheat has had a pretty good recovery lately and to see some profit taking is not surprising. We are hearing more talk of wheat feeding which is also benefitting the complex. Additional support is coming from global weather conditions that are less than perfect. This includes colder weather in the EU and US and drought in Australia. While these are not at a point where they are cutting yields, there is a possibility, and that alone is generating buying.

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

Market Update; Thursday, May 2nd, 2019

Trade has started out today’s session the way it finished yesterday, with grains on the plus side and soybeans under light pressure. Grains are again taking support from ongoing rains and the delays they are causing to planting. We are also hearing more concern over cold soil temperatures and what impact they will have on planting, as well as crops that are already planted. We are also seeing some technical buying today, mainly in the wheat complex. Trade is also paying close attention to trade talks between the US and China. While we continue to hear reports of progress, the lack of confirmation is worrisome. Fund activity will determine how we close today.

Corn futures are mixed with little interest being shown in the complex. Planting remains slow across much of the Corn Belt, but that does not mean progress is not being made. We are hearing reports of at least limited planting, mainly in Southern regions. It is also likely that last Monday’s progress number was lower than the actual amount planted. Slightly better weather forecasts will also allow for the resumption of planting in the next few days. We are a month away from the final corn planting date, and it is highly unlikely we will not see planting conclude by then. Conditions are improving in Brazil which may easily off-set any losses to US production in the global market.

Soybeans are again struggling today as selling momentum builds. Not only are funds sellers, but we are seeing little fundamental support for the complex either. China is passing over US soybeans in favor of these from South America. Right now, Brazilian soybeans are being offered at a 20 cent per bushel discount to the US which is attracting most buyers. It is reported that China booked 8 vessels from Brazil yesterday because of this.

Wheat futures are the defined leader today with heavy buying in the front months of that complex. This is stemming from little other than technicals, as fundamentally, wheat has little going for it. The only real source of fundamental support for wheat is that prices are low enough we could see it used as a feed ingredient in US feedlots. While on paper this is possible, the reality of it happening is unlikely.

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

Market Update; Wednesday, May 1st, 2019

Grains were firm in the overnight session while soybeans favored the negative side. The grains are taking support from increased concerns over planting delays and the impact they will likely have on yields. This goes for both corn and spring wheat. Soybeans tried to rally, but are struggling with a lack of fresh supportive news. The main concern with soybeans is a lack of Chinese demand. Reports that “one way or another” the trade dispute with China is going to end is also weighing on soybeans. Trade is also keeping a close eye on the rising water levels on US rivers and what they mean for logistics as well.

Corn is finding some much-needed support from ongoing rains in the Midwest and what their impact may be on production. Data from the University of IL shows any corn planted after May 10th tends to have a 5% yield reduction. If planted after the 20th this climbs to 9%. Given current weather models it is likely a lot of the US crop will be planted past these dates. Analysts also believe that upwards of 1 million corn acres will shift to alternate grains as well. Funds continue to hold a record short position and to see this start to be covered from these factors is not surprising.

Soybeans are struggling today from a variety of factors. The main one of these is demand and how yearly exports are 441 million bu behind a year ago. This is also 190 million bu under estimates. Time is running out on a trade resolution with China which is also weighing on soybeans. A new contract low was set in nearby soybeans yesterday, but futures were able to bounce off this, which was supportive. We have yet to see any fresh buying though which is limiting market response. The possibility of an increase to soybean plantings of nearly 1 million acres is also weighing on soy futures.

Wheat is taking support from the same weather concerns that corn is. It is quite likely that spring wheat plantings will decrease from ongoing rains. A bounce off technical lows is also benefitting wheat today. Advances are being restricted by slow export loadings and large global wheat stocks. Reports of highly rated wheat in Kansas are also capping early wheat gains today.

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

Market Update; Tuesday, April 30th, 2019

Trade is narrowly mixed today with little real interest being shown from buyers or sellers. The most talk in the market this morning is centered on the national planting pace and how we are trailing the average pace in the main production states. That said, we are nearly equal to where last year’s planting was on this date. Current weather models and conditions do not indicate active planting will take place this week, but it will still not be surprising to see some advancement next week. Trade is also monitoring the trade talks between the US and China that are taking place this week and again next week. A few analysts are hopeful a full resolution between the two parties can be reached by mid-May. All eyes this morning are on weather and the outside markets.

Corn planting as of Sunday night totaled 15% for the US, well behind the average of 27% for that date. The US corn crop is also 3% emerged with the average being 5%. We will likely see some planting this week, but it is doubtful the pace will catch up to the average. There is more talk of acres shifting from corn to soybeans if conditions persist. Some analysts believe upwards of 2 million acres may move from one crop to the other, but it is still too early to confirm this. History shows that if planting has not reached 70% by the third week of May the possibility increases.

Soybean planting as of Sunday reached 3% with the average being 6%. As with corn, the current weather conditions are simply not conducive to soybean planting. Some concerns are being voiced over the colder temperatures and what they mean for crop development. Reports indicate China cancelled 10 cargoes of Canadian canola yesterday as the conflict between these two ramps up. On one hand this could bring the US more soybean demand, but at the same time, the canola will now compete with the US for soy sales to other buyers. It may be hard for the US to make any sales given the $15 to $18 per ton price spread between the US and South America.

Wheat values are under light pressure this morning as the rating of the winter crop continues to rise. This crop is now rated 64% Good/Excellent compared to 33% a year ago. Spring wheat planting is now at 13% which trails the average 33% for this date. The wheat quality tour kicks off in Kansas today which may give us a better indication of what crops really look like. The likelihood of more wheat acres in Canada is also weighing 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 ksetzer@citizenselevator.com . You can also follow Karl on twitter; @ksetzergrains

Market Update; Monday, April 29th, 2019

Trade has started out the week mixed, with corn on the plus side while soybeans and wheat are under light pressure. All eyes this morning are on weather and what impact it may have on planting progress. Widespread rains are forecast for the Corn Belt this week, with higher amounts predicted for the East. While active planting was reported last week, how much we see in the next seven days is going to be questionable. Trade is also monitoring the talks between the US and China that are taking place in Beijing this week. Reports claim talks are “going well,” but no details have been released. First notice day for the May contracts is tomorrow, which is adding to trade positioning today.

Corn futures are showing the most strength today as short covering takes place ahead of First Notice Day. Corn is also finding support from the increased possibility of lower planted acres due to ongoing rains in the Corn Belt. We are now approaching the time where acre shifting from corn to soybeans is more likely. While corn has a sizable cushion in the domestic market, we are seeing global stocks tighten. This not overly concerning at this time, but definitely could be in the near future. Above all, corn is simply over-sold in a market that is void of risk premium. To see futures rally from these factors alone should not come as a surprise.

Soybeans are posting fractional losses at the start of the day session as we see little buying interest in that complex. Soybeans are suffering from the same negative factors that it did last week, with the main one being elevated global production and thoughts demand is being over-stated at the present time. When it comes to production the most attention is on Argentina where this year’s crop is expected to be 20 million metric tons larger than a year ago. At the same time, the world’s leading soybeans buyers, China, is indicating it is well supplied and does not need to make large purchases. This is quite conflicting though, as China does buy soybeans when the market sets back. The possibility of more soybean acres in the US from weather is adding to market pressure.

Wheat is starting to falter as we move into the day session as selling increases. This is mostly from large global production figures and more than adequate stocks. The only region in the world that is showing questionable production figures is Australia, and even there adverse weather is correcting itself. Larger production figures in Russia are expected to more than make up for any losses in Australia. Bottom line is that we simply are not generating any buying interest in the wheat complex, and until we do, futures will suffer.

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

Weekly Market Review; Friday, April 26th, 2019

Cash Market Becomes Divided

We are starting to see a division take place in the US cash grain market. Exporters are not pushing for deliveries right now as global demand for our offerings has been less than stellar in recent weeks. Basis values, which are the difference between commodity futures and cash bids, have weakened as a result. This is mainly from competition in the global market, as buyers can source needs from alternative sources at sizable discounts to the US. For corn this disadvantage for the US has been as great as $20.00 per metric ton in recent weeks, and for soybeans the spread has reached $15.00 per metric ton.

The spread between the US and other sources has widened to a point where imports would make economical sense for coastal processors, mainly for corn.

Not only is price affecting US exports, but so is commodity demand on a whole. The most publicized remains the spread of African Swine Fever in China. A reported 200 million Chinese hogs have been culled in an attempt to contain the disease. As a result, China no longer needs to import feed grains in the volumes they have been. This is mostly impacting soybeans at the present time.

The concern with ASF is that there is currently no vaccine for the disease. Experts claim that it will take at least three years for this disease to be contained, and even that is an optimistic time frame.

While global corn demand is not up to original projections, the market appears to be missing the big picture for the complex. Even with a decrease to corn usage, global stocks are still forecast to decrease 26 million metric tons from last year to this year. Even if world corn production does increase from current estimates, it is highly unlikely we will see this shortfall erased.

Interior demand and basis values remain strong, however. For soybeans this is the result of crush margins and a need for soymeal. The loss of hog production in China has elevated export demand for US pork and now that industry is pushing itself to the limit to satisfy demand. This is a fragile situation though, as even at full capacity, the US pork industry will not be able to satisfy all of China’s demand. This will limit how much upside we have to domestic soybean demand, and in turn, how much of a premium that crushers are willing to pay for soybeans to process.

Interior corn bids are also much better than usual at this time. This strength is stemming mostly from the ethanol industry as production struggles to get back on line following the March floods in the Midwest. A simple lack of desire from farmers to make sales at today’s values also has buyers and processors paying premiums for deliveries. In several cases this has pushed interior basis values to levels not seen in the past several years.

While we are seeing uncharacteristic strength in the interior cash market, there are factors that have limited basis improvement. One is the fact the Mississippi River is still not fully open for navigation. Typically, the river is fully open by mid-April. Unseasonably cold weather and flooding have prevented the river from fully opening this year though, and sources claim it may be the first part of May before it is. As a result, river terminals have not been pushing for deliveries as they remain full.

Another factor is that US grain and soybean inventories are at record levels. Buyers know this inventory will eventually move, and are willing to limit their bids to quick-ship incentives until it does.

Even where the Mississippi River is open, we are seeing transit issues. The river is still experiencing high water levels that are restricting barge movement. This is not just for grain movement south, but for inputs being brought north. This will become much more of a factor once the US planting season pace increases and input needs rise, mainly for fertilizer.

Harvest is progressing across South America, and as it does, crop size estimates are increasing. Late-season rains were a great benefit for the crops and added bushels to both corn and soybeans. As a result, analysts believe Brazilian soybean production will be second only to last year’s record crop. Basis values have weakened in Brazil as a result, making their offerings even more affordable for an importer.

The International Grains Council has revised their wheat and corn production estimates. The IGC now estimates world wheat production at 762 million metric tons, up from last year’s 735 million metric tons. The firm’s corn production estimate is at 1.13 billion metric tons for this year, up slightly from last year’s 1.12 billion metric tons. Even with this slightly higher production forecast global corn reserves are expected to shrink from this year’s 311 million metric tons to just 275 million metric tons.

The greatest issue for the world commodity market right now is that we are in a “buyers’ market.” What this means is that global commodity supplies are at a level where we are seeing little urgency in covering needs. A buyer knows there are enough supplies to satisfy demand and ae willing to go hand to mouth as a result. Even if a buyer does run short in such a market, they will simply post an attractive basis, buy what they need, then quickly fade their bid again. As a result, sellers need to show no hesitation when it comes to liquidating inventory at attractive values.

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

Market Update; Friday, April 26th, 2019

Overnight trade was mixed with the grains on the positive side and soybeans under pressure. Grains took their support from technical short covering and building concerns over the planting rate in the Corn Belt. We have seen active fieldwork this week, but this has come to a halt in some locations that are again receiving rain. All eyes are on the spring storm that is bringing rains and up to 5 inches of snow to the Upper Corn Belt. This will likely keep farmers out of the fields for several days. We are also hearing more concern voiced over delays to input deliveries in northern regions of the US due to logistic issues on the Mississippi River. There are thoughts these could cut corn acres in that region. Fund positioning will determine how all commodities finish today’s session.

Corn is taking support from a rebound in wheat and predictions for declining world corn stocks this coming year. The International Grains Council upped their world corn production estimate to 1.13 billion metric tons for this coming year compared to 1.12 billion metric tons last year. World corn carryout is forecast to decline to 275 million metric tons though, down from this year’s 311 million metric tons. South Korea bought a cargo of US corn overnight which is also supportive. Advances are being capped by reports that even with local delays, a lot of corn planting has taken place in the past week.

Soybeans are under pressure from a lack of demand and higher production forecasts for the global market. China was listed as a buyer of US soybeans in the weekly report, but this was well below what they booked from South America. China has booked a reported 44 cargoes of South American soybeans this week showing where their interest really lies. China’s total soybean demand is down though, with March receipts only being 50% of a year ago. Soybeans are finding support from news that Canada will plant even less canola than initially thought.

A technical recovery is giving wheat some much needed support this morning. Concerns over dry conditions and how they may impact the Australian crop are giving the complex strength as well. This is being somewhat limited by forecasts calling for ample rainfall over the next 90 days which will temper any yield loss. The IGC updated their world wheat production estimate, putting it at 762 million metric tons. This well above the 735 million metric tons that were produced last year. The EU believes they will export more wheat than a year ago which is also keeping a lid on the US market.

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

Market Update; Thursday, April 25th, 2019

The fund crowd continued with its selling in the overnight session on the grains, giving us a weaker market on those contracts. This was mostly in the wheat complex, but losses also took place in corn. Soybeans were able to distance themselves from the grains as demand is increasing for our offerings in the global market. Predictions for fewer Canadian canola acres this year also benefitted the soy complex. US/China trade talks are set to take place in Beijing next week, followed by meetings in the US the next week. Reports indicate good progress is being made, but a full resolution has yet to be reached.

Corn futures are again weaker today from little other than fund selling. Funds added a reported 7,000 short contracts to their position yesterday, bringing their total short to an estimated 396,000 contracts. Open interest continues to climb in corn showing this is in fact fresh selling. Larger production forecasts for Russia and Ukraine are adding to corn market pressure, although a 15% reduction to the South African crop due to drought is off-setting some of this gain. The market is also keeping a close eye on the Safrinha crop in Brazil as pockets of drier than liked soils are emerging.

Soybean futures are posting a slight recovery today following recent losses. Soybean values have dropped right to technical support levels, and so far, these are holding. Soybeans are also taking support from news Canada will seed upwards of 1.5 million fewer canola acres this year, which should in turn generate less competition for the US in the global market. Interesting to see that China is already in the market buying larger amounts of soybeans in place of canola. We are seeing heavier sales out of South America this week due to currency exchange rates, which is capping our rally attempt.

The wheat complex is struggling this morning, mainly from the losses we are seeing in corn that are spilling over into other commodities. Thoughts that we could see upwards of 2 million more spring wheat acres in Canada this year are also hindering the wheat market. Ample world wheat stocks are also pressuring futures today. The fact that most of this news is already known and factored into values is preventing heavy losses from taking place. The wheat quality tour begins next week which should hopefully give the market some much needed fresh news to work with.

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

Market Update; Wednesday, April 24th, 2019

Trade was mixed to start the day’s session, but is now under pressure across the board. Much of what we are seeing is simple technical positioning and consolidation. Funds are generating significant revenue from their short positions which is preventing them from buying. The fact that the world market is well supplied with grain and soybean stocks is also keeping a lid on values. A lack of fresh negative news is keeping early losses at a minimum today.

The US corn market is in a tight spot at the present time. The US is competitive in the world market for immediate ship bushels, but this quickly changes once we get to the summer months. At that point South America is the cheapest source for corn needs. Corn demand in the global market is on the rise, especially in China. Chinese corn imports this calendar year are up 76% from the same period a year ago. Global corn reserves are ample, but have tightened in recent years. If this trend continues it could easily put the marketing into a rationing position.

Soybeans are posting a recovery today following yesterday’s sharp losses. A sizable drop in the Canadian canola market spilled over into the global oilseed complex, pressuring soybeans. Soybeans were further pressured yesterday by the fact that the US is the highest priced source for that commodity in the global market. The market spread favors Brazil for soybeans from May through August by 20 to 30 cents per bushel. A drop in Chinese soybean imports of 14% from a year ago is also weighing on soy futures. Soybeans are already oversold though, which is preventing fresh selling from taking place.

The wheat complex is under pressure today as fresh selling has developed in the complex. This follows reports out of Canada that we could see upwards of 1 million more spring wheat acres given the export issues with canola in the country. We have seen an increase in wheat demand in recent days, but this is not making a large enough shift in the world balance sheets to cause buying in the complex. We are seeing concerns over the sluggish planting pace on spring wheat that is preventing heavy selling at this time.

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

Market Update; Tuesday, April 23rd, 2019

Trade started out the day mixed with corn and soybeans under pressure while wheat was on the positive side. A lack of fresh news is the primary negative factor for all grains this morning. Planting rates on corn and soybeans were on the low side of normal, but given current weather outlooks we should see considerable progress this week. This is especially the case for the main production regions of the Corn Belt. The ongoing lack of trade resolution between the US and China is also weighing on futures this morning, even though talks are scheduled to take place this week in Beijing. Bottom line is we need to see fund short covering develop in the market, and until it does, advances will be hard to obtain.

The weekly corn planting pace is 6%, half of the normal 12% for this date. The five-year average for next Monday is 27% complete. While this number may be hard to reach, the US could come close given current weather outlooks. Beyond that is questionable as long-range weather models indicate a return to cool, wet conditions. Even with all of the less than bullish news in the market, we need to remember that world corn supplies are 44 million metric tons tighter than just two years ago. This alone should help support corn values in today’s market.

Soybeans are the loss leader today as we see fund selling develop in that complex. The main reason for negativity in soybeans is from demand concerns. Chinese crushers are only running at 30% of capacity on a lack of meal demand. Yearly crush in China is down 6.5% and expected to decline even further. At the same time, we are seeing larger crop estimates out of South America which will only add to the global soybean reserve. Weekly soybean loadings out of the US last week were the lowest of the year at 382,000 metric tons. The initial planting report on soybeans showed 1% of the crop is in the ground with the normal amount on this date being 2%.

Wheat values have separated themselves from the other commodities today to post moderate advances. One reason for this is the spike in demand we have seen in wheat. Weekly export loadings in yesterday’s report showed a yearly high of 811,000 metric tons of inspections. We are also hearing reports of Texas feedlots inquiring on wheat purchases. Wheat is simply undervalued in today’s market which is bringing about speculative buying which is what all commodities need. Wheat advances are being held in check this morning by a 2% increase in the winter crop rating to 62% Good/Excellent. This is twice the volume that was highly rated a year ago.

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

Market Update; Monday, April 22nd, 2019

Corn, soybeans, and wheat have all started the week under pressure. The lack of a fresh bullish story is the primary cause of this action, although technical pressure is also a factor. Weather outlooks are more compatible with spring planting which is being viewed as bearish for the markets. At the same time, the market really doesn’t have any bearish news, which is preventing heavy losses at this time. It is likely we will see another week of sideways trade as a result.

While corn futures are under pressure today, losses are being held in check by an already record short fund position. Funds are short a reported 323,000 contracts which has limited fresh selling interest. At the same time, there is not enough of a bullish incentive to cover these shorts, which is preventing a rally from taking place. Corn planting is expected to come in around 8% complete this afternoon compared to the usual 12% for this date. Given current weather models we should see a sizable jump in planting this week and we might be close to or ahead of normal by next week. Interesting to see Argentine officials estimating its corn crop at 55 million metric tons compared to the USDA estimate of 47 million metric tons. The USDA does not include silage in their estimate which is the reason for the discrepancy.

Soybeans are under a little more pressure today as fresh selling takes place in that complex. Funds are heavily short the soy complex at 91,000 contracts, but this is not a record, giving them more room for selling to take place. The initial soybean planting figure is expected to be released today with a 3% completion. We are hearing that some of the poorer rated winter wheat fields are being torn up and soybeans will be planted on them. Trade is not as concerned with corn acres shifting to soybeans, but this may add just as many. Bottom line for the soy complex is that NO additional acres are needed. The Argentine soybean crop is expected to be 18 million metric tons larger than a year ago due to much improved weather conditions.

Wheat is the loss-leader today as we see little buying interest there at all. Trade is expecting to see continued high winter wheat crop ratings tonight, although there are some concerns building over quality. Some analysts believe that the lack of stress on the crop this year will generate low protein levels in the grain. Given ample world supplies of wheat, this may cause a lack of export interest if correct. The Russian wheat crop is expected to come in nearly 8 million metric tons larger than a year ago due to favorable growing conditions. Spring wheat planting expected to come in around 8% complete tonight. With funds already short 100,000 contracts in the wheat complex heavy selling may be limited, although a lack of buying can cause losses just the same.

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

Market Update; Wednesday, April 3rd, 2019

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

Weekly Market Review; Friday, March 29th, 2019

Prospective Plantings, Stocks Data Released

The long-awaited prospective plantings report was finally released last week. For the upcoming year, the USDA is projecting acres of 84.6 million on soybeans, 92.8 million on corn, and 45.7 million for soybeans. This was a greater number on corn than analysts were projecting, and lower numbers on soybeans and wheat. They are in line with what was released in the Ag Outlook Forum in February, however. This data was collected prior to the Midwest flooding though, and all are highly suspect.

The quarterly stocks data was also released, and was more in line with trade expectations. As of March 1st, the United States held 2.71 billion bu of soybeans, 8.6 billion bu of corn, and 1.6 billion bu of wheat in reserve. These were relatively close to what trade was anticipating. Compared to last year, this is nearly 600 million bu more soybeans, 290 million bu less corn, and 105 million bu more wheat.

The greatest issue for commodities at the present time is simply supply versus demand. While we have seen steady commodity demand this year, it has not been up to projected levels, and not nearly enough to keep reserves from building. This is not just on the domestic side, but from a world prospective as well.

The commodity suffering the most from this is soybeans. At the present rate of sales, yearly totals will fall 400 million bu short of estimates. There are hopes that the trade talks between China and the US will progress to a point where trade will resume, but these are starting to fade. The latest on these talks is that they will not resume until June. By then, the US will be past the point of the marketing year when old crop exports tend to take place. A greater concern for soybean demand is the cancellation of already booked sales.

We are also seeing concerns over wheat demand. At the present time the United States has only booked 66% of the total yearly sales that it is expected to make. This is a record low volume, with little time left in the old crop marketing year. The US is competitively priced on wheat in the global market, but the fact world supplies are so high there is little incentive for a buyer to come to us for needs. This is mainly due to lower freight costs from other origination points for buyers than the US.

While also depressed, demand for corn is getting less market attention. This is because the stocks to use ratio on corn is tighter than on soybeans or wheat. We have also seen a steadier demand base on corn, including a recent sale to China. This failed to receive much of a reaction though, as the sale was less than what had been expected from trade talks. China also left all GMO restrictions out of the sales contract which leads many analysts to believe the booking will eventually be cancelled all together.

One point that our export market has going for it is that eventually the US will become the most economical source for needs and we will see demand build.

Spring weather is becoming more of a market topic. While there is still plenty of time to get the crops planted, some long-range models indicate the wet pattern across the United States will continue. A few of these are calling for flooding to last for the next six to eight weeks. This would be a game changer for not only production, but acres as well. At the same time, we are seeing forecast models calling for El Nino conditions to impact this year’s growing season, which are historically associated with above trend yields. These two conflicting outlooks are preventing trade from adding any amount of risk premium to futures values.

When it comes to spring weather, the most attention at the present time is on wheat. This centers on North Dakota, where heavier than normal snow cover is being reported. This alone is likely to delay spring wheat seeding, and the possibility of flooding will only make the situation worse. This follows a fall where winter wheat seedings were the lowest in the past 110 years. There is also a concern over what kind of a stand the winter wheat crop will be when it emerges, and how much production might be lost.

The reaction to this news is being tempered by ample world wheat supplies and how any production loss in the United States can easily be made up for by other sources.

While the focus in the US market is on spring planting, in the global market this is on harvest, mainly in South America. The Brazilian soybean harvest is now 70% complete. Brazil is now the leading supplier of soybeans to the world market, even with a slightly less than expected crop size. Analysts in Brazil claim that drought has reduced the crop enough that exports will likely be affected as well. Some analysts believe Brazilian exports will be down 14% from a year ago.

When it comes to global soybean demand, all attention right now is on China. African Swine Fever has cut China’s pork production by a reported 40%. China, who is the world’s largest soybean importer, will likely reduce its soybean demand as a result. This could actually benefit the United States, as China has turned to pork imports rather than soybeans for feeding. China has already come to the United States for pork needs, which is greatly benefitting that market. Some economists believe it could take up to two years for China’s pork production to get back to normal from the ASF outbreak.

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

Market Update; Friday, March 29th, 2019

Nearly all of the early trade today has been last minute positioning ahead of the USDA’s quarterly stocks and planting intentions reports. It is not uncommon to see a significant reaction to these numbers in the market, with the average move being in the double digits. As for the direction, there is little clear indication. Many analysts are expecting a friendly market reaction given the already large short position the funds are holding. Once this data is released trade will revert to monitoring weather and field reports ahead of the spring planting season.

The average estimates for corn in today’s report is 8.335 billion bu on stocks and 91.33 million acres. The most attention is on acres, as thoughts are recent weather conditions will limit the number of acres planted to that crop. Corn traders are also monitoring the South American crops, as analysts have started to increase production forecasts for both Argentina and Brazil. The International Grains Council has reduced its world corn stocks though, as it feels demand will outpace production for the 2nd year in a row.

Soybean number estimates today are for 2.68 billion bu of stocks as of March 1st and 86.17 million planted acres. This acreage number is being heavily contested with nearly all analysts expecting a higher figure. Any stocks number today is going to be contested as well, as recent demand has been much less than projected. At the present time soybean crush appears to be over-estimated by 100 million bu and exports over-stated by 300 million bu. If accurate, this alone would push ending stocks well above the 1 billion bu mark. Rumors flowed through the pit yesterday that China had bout 1.5 mmt of soybeans for state reserves, but a lack of confirmation has limited the ongoing response.

Average wheat expectations for today’s data release are 1.55 billion bu of reserves and 46.9 million planted acres. Neither of these are bullish nor bearish in today’s market environment. The technical picture broke-down in yesterday’s session which gave us our lower closes. This really was not that surprising given the strength we have seen in the wheat complex up to this point. Improving export numbers are keeping a floor under wheat values, as are thoughts acres may fall short of expectations given spring weather outlooks for the Plains.

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

Market Update; Thursday, March 28th, 2019

Trade has started the session mixed with grains under pressure and soybeans on the positive side. Much of what we are seeing is simple position squaring ahead of tomorrow’s acreage and stocks reports. There is a little more fundamental news for the market to work with this morning, but much of this is being overlooked. One of the big stories this morning is reports that up to 41% of China’s hogs may have been culled from ASF. If correct, this will greatly impact China’s commodity demand on a whole. On the positive side, this has economists expecting to see record Chinese pork imports from the US, and should benefit that industry. Trade is still keeping an eye on the floods in the Midwest and what the impact will be on acreage. Cooler temperatures have prevented rapid snow melt which is good, but are also preventing soils from warming ahead of spring fieldwork.

Corn futures are under mild pressure today as the US is starting to face more competition in the global market. This comes when the corn export program is already struggling to maintain a share of global trade. Ukraine officials claim their grain production will be up 7 million metric tons from last year, and the Brazilian Safrinha crop is expected to be a huge 23% larger than last year. Many buyers are already lining up for the newly harvested Argentine corn as well. In spite of this, US export basis remains strong as terminals are unable to get timely shipments out of the flood-stricken Midwest. Funds are holding a record short position going into tomorrow’s reports though, which could easily set the market up for a rally, even with neutral data.

Soybeans are trying to post advances today, but struggling to entice any buying interest. Early soybean harvest reports out of Argentina are 20% above trend which is tempering any attempt at a rally. Export demand is minimal right now, which is also keeping a lid on soybeans this morning. Some of this is being countered with ongoing crush demand and slow country movement. All attention in the soy complex is on China and the spreading ASF. We are now hearing of heavy losses in Vietnam as well. As with corn, the large short position funds are holding is preventing heavy selling ahead of the USDA reports.

Wheat is suffering the greatest losses today as a classic case of “buy the rumor, sell the fact” takes place following overnight export sales. Egypt was in and booked several cargos of US wheat, and others are tendering for feed wheat. Farmers are also holding wheat as they are uncertain of this spring’s acres and planting potential. Wheat is also oversold, which is preventing losses from being extended.

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

Market Update; Wednesday, March 27th, 2019

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

Market Update; Tuesday, March 26th, 2019

Corn and soybeans are under pressure this morning while the wheat market is firm. Technical resistance is weighing on corn and soybeans this morning, as is a general lack of demand. Uncertainty over acres and stocks is adding to pressure on corn and soybeans as well. We are also seeing more concern over the state of the global economy and what it could mean for future demand. There are hopes that easing political tensions in the US will lead to more demand which is limiting today’s declines.

Corn is being pressured by spill-over weakness from the soy complex this morning, but finding support from a firm wheat market. We are also seeing a build in concern over weather in Brazil and what it could mean for the Safrinha crop. Conditions are turning slightly drier in Southern Brazil and this could lead to production losses. South Africa is also claiming drought loss of 16% on this year’s corn crop. The average estimates for Friday’s reports are 91.3 million corn acres and 8.34 billion bu of stocks as of March 1st. If this acreage number is correct, the US will need record yields to maintain our current carryout supply.

Soybeans are struggling with technical weakness today, as well as worries over demand. Even if China would buy their normal volume of soybeans from this point through the end of the marketing year our total sales would still fall 300 million bu short of expectations. The likelihood of elevated soybean acres this year is also pressuring the market. The average estimates for Friday’s USDA reports are 86.17 million acres and 2.68 billion bu of stocks. Nearly all analysts expect the actual soybean acreage number to be higher, the question is how much.

Simple short covering is supporting the wheat complex this morning. Wheat values have been pressured for an extended period of time for the same fundamental reasons, and this is losing its impact on trade. We are also seeing more attention to the acreage estimates for the Dakotas. It is quite likely we have not seen the worst of the flooding for the Red River Valley and wheat acres will be impacted. Advances in wheat are being held in check by the fact the US needs to remain competitive in the global market, and this includes freight, which currently favors Argentine wheat over ours. The average wheat guesses for Friday are 47 million acres and 1.56 billion bu of reserves.

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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Market Update; Monday, March 25th, 2019

Futures are on both sides of unchanged to start the week as we see position squaring start to take place ahead of Friday’s USDA reports. The most interest going into this is on acreage, mainly if we will see a confirmation of the expected shift from soybeans to corn. What is more likely is we will see numbers closer to the Outlook Forum projections from February. The lack of a fresh story to drive traders is adding to the lethargic market to start the week. The flooding in the Midwest remains an issue and topic in the market, but this is no longer fresh news. So far, losses in Iowa and Nebraska total $3 billion and will grow from there. Funds remain heavily short in commodities which is limiting selling interest, while improved global production figures is capping gains.

Corn futures keep bouncing on both sides of unchanged today with little fresh interest being shown in the complex. Funds are holding a record short position which is preventing losses, as is strength in the cash market. This demand may be short lived though as 13% of US ethanol plants remain idled due to the Midwest flooding. Black Sea corn is trading at a discount to the US which is muting the export market. Trade is unimpressed with the Chinese purchase from last week, as the booking was more of a goodwill gesture than out of need. Interesting to see there were no GMO restrictions on the corn booking, which many analysts are taking as a sign it will be canceled in the future.

Soybeans have tried to rally this morning but simply cannot find buying interest. China is showing little interest in booking US offerings which is a dark cloud in the complex. This combines with the cancellation for new crop bookings in last week’s export report to show global demand for US offerings is minimal. Add in the likelihood of elevated soybean plantings this year and we could see significant pressure on the soy complex. One good point of this is that eventually US soybeans will become the most affordable in the global market and entice demand.

Wheat values are also on both sides of unchanged this morning. Demand remains the greatest limiting factor on wheat, as year to date sales are just 66% of total expectations. This is an all-time low volume. Reports that the Ukraine crop is in near perfect shape also weighing on wheat futures. The fact that US wheat is already competitive in the world market is limiting downside potential.

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

Market Update; Friday, March 22nd, 2019

Trade is mixed to start the day with the grains on the positive side and soybeans in the red. Grains are taking the majority of their support from technical short covering in oversold conditions. News that China was in and booked 300,000 mt of US corn overnight is also supporting that complex. Grains are taking additional support from ongoing weather conditions and flooding in the Midwest that are now expected to last for the next several weeks. Soybeans are struggling with a lack of fresh news and a growing possibility of higher than expected plantings this spring.

Corn is showing a stronger attitude going into the weekend as we see the much-publicized Chinese business finally was confirmed. China was in and booked 11.82 million bu of corn overnight. The question now is if this is a new purchase or the business that was rumored to have been shaping up last week. Rumors that China could be interested in another 20 million metric tons of corn would have more of an impact on the market if confirmed. This would cut the US carryout nearly in half. Concerns over the ability of the market to secure needed acres this year is also benefitting corn futures, as is simple oversold conditions. Advances in corn are being tempered by concerns over domestic usage, mainly ethanol, as 13% of the nation’s production is off-line from Midwest floods.

Soybeans are on the defense today with solid declines being posted in the complex. Concerns over demand are weighing on the soy complex, mainly in China. Chinese hog production is expected to decrease 10% this year from African Swine Fever, and that’s if no more cases are reported, which is highly unlikely. This disease is now spreading into other countries and will likely reduce their feed grain demand as well. The possibility of more soybean acres than initially projected this year is also hindering soybean futures. Losses are being held in check by a lack of competition in the global market.

The wheat complex is the leader in the market this morning as we see active short covering in that market. Wheat has been technically oversold for the past several weeks and we may finally be seeing the tide turn. We are also seeing elevated demand for wheat in the global market as South Korea made another purchase of feed grade wheat overnight. Building concerns over the quality of the winter wheat crop are also supporting futures this morning. Advances are being capped by technical resistance, which has prevented a rally for the past week.

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

Market Update; Thursday, March 21st, 2019

Trade is mixed this morning with corn posting slight advances, and soybeans and wheat under pressure. The majority of what we are seeing is fund balancing and positioning. There are renewed concerns over global trade conflicts as the White House has stated that even if a deal is reached between the US and China, tariffs will likely remain in place. This gives China little reason to give in to US demands. News that China and Brazil are in talks to expand trade between those two is adding to the likelihood of China continuing to bypass the US in the global market. Flooding in the Midwest remains a factor in the market, not just for this year’s production, but for possible quality loss in flooded terminals as well.

Corn futures are benefitting from little other than short covering. Funds have built a record short corn position at a time of year when we tend to see the addition of risk premium in the market, which is starting to give the complex support. We are starting to see less belief in estimates for elevated acres this year, which is generating new crop balance sheets worries. While the US is in no position to deplete corn stocks, it could easily draw them down to a level where rationing would be needed.

Soybeans tried to work higher this morning, but simply cannot find enough buying interest to sustain a recovery. The elevated trade tensions between the US and China are the leading cause of this action. The fact that Brazil’s soybeans are being offered at a 15 cent discount to the US is adding to market negativity. Losses in soybeans are being limited by the fact that they are also heavily oversold given the stage of the marketing year we are in.

Wheat futures are the loss-leader today as funds continue to add to their short position in that complex. This is a result of little other than supply and demand on a global scale. We are seeing steady wheat demand, but nothing that would warrant any additional buying interest. Wheat traders are disappointed in the trade negotiations between the US and Brazil, as the Brazilian offer to import 750,000 mt of wheat is not just from the US as thought, but from the global market.

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