March 12 Afternoon Comments

By Steve Freed

Soybeans, soymeal, soyoil, corn and wheat all traded higher. US Dollar was lower.

SOYBEANS

Soybeans traded higher. Talk of tighter US domestic soybean supplies, better than expected demand for US soymeal, lower estimate for the 2019 Brazil soybean crop and lower estimate for US 2019 soybean planted acres offered support. Managed funds have been adding to their net short soybean position due to higher World soybean supplies. CONAB estimated Brazil 2019 soybean crop near 113.5 mmt vs USDA 116.5. Informa lowered their March US 2019 soybean acres 550 thousand from February and estimate acres now near 85.5 million vs 89.1 last year. Negotiations to settle the trade battle between the U.S. and China are intensifying, with U.S. Trade Representative Robert Lighthizer telling a Senate panel Tuesday he is talking regularly with his Chinese counterpart. We estimate managed funds net short 89,000 soybean contracts and 52,000 soymeal contracts. Open interest has increase about 50,000 contracts during the selloff from the recent highs. SK resistance is near 9.00 then 9.15.

Soybean Futures Chart

CORN

Corn futures regained some of Mondays losses. The turnaround was in part due to an oversold technical picture with managed funds near record short corn futures, talk of tight US domestic corn free supplies and better than expected demand for ethanol. Word that EPA may finally approve year round E15 blend may have also offered some support. Managed funds are estimated to be net short 217,000 corn contracts. Open interest has been going up on the recent sharp selloff in prices and on good volume. CONAB estimated 2019 Brazil corn crop near 92.8 vs USDA 94.5. Informa raised their March US 2019 corn acres from February 180 thousand acres and estimate US 2019 corn acres near 91.8 vs 89.1 last year. They estimate US 2019 corn crop near 14,937 million bushels versus 14,420 last year. This includes a yield near 177.0 versus 176.4 last year. More rains are forecasted for the Midwest and plains over the next few days. Then it looks warmer and drier through next week. 11-15 day forecast though hints of a return of rains for the Midwest. Negotiations to settle the trade battle between the U.S. and China are intensifying, with U.S. Trade Representative Robert Lighthizer telling a Senate panel Tuesday he is talking regularly with his Chinese counterpart.

Corn Futures Chart

WHEAT

Wheat futures got a shock and traded sharply higher. Initial talk that US and China trade deal may be moving along may have triggered fund short covering. This weeks US exports were better than expected but still behind the pace needed to reach USDA goal. Some had feared that the window for increase US exports were closing as North Hemisphere 2019 Crops begin to grow. Word that Ukraine long range weather forecast might be turning warmer and drier may have also supported todays turnaround. USDA raised this weeks KS and OK wheat crop ratings but lowered TX. ARK ratings were below normal due to too much rain. Informa estimated US 2019 Wheat acres near 46.7 million vs 47.8 last year. The drop in May Chicago futures from 5.24 to 4.27 was on increase volume and open interest. Managed funds are estimated to be net short 86,000 wheat contracts. Most feel market needs a 2019 supply problem to sustain a rally.

Wheat Futures Chart

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2019-03-12T19:15:58+00:00 March 12th, 2019|