RSS Feed

Karl Setzer Grain Commentary

Closing Comments; Thursday, February 22nd, 2018

Grains closed mixed after a quiet session today.

Trade was on both sides of unchanged today with fund positioning being the driving factor in the market. Early weakness came from a lack of buying interest and elevated harvest pressure out of Brazil. Higher soybean sales in Brazil also limited that complex early in the day. These were negated by continued reductions to the Argentine crops and light fund buying at mid-session.

The Ag Outlook Forum released their acreage estimates this morning with little fanfare. An even 90 million acres are being forecast for both corn and soybeans by the group. This is even with trades estimate on corn, but slightly less on soybeans. The U.S.D.A. also projected net farm income to decrease this year compared to a year ago, despite expectations for corn values to increase 3% this year and soybeans to hold nearly steady to a year ago.

While not a concern right now, trade is paying close attention to the world corn supply. In its latest balance sheet release, the U.S.D.A. pegged world corn reserves at 203 million metric tons. This is a 26 million metric ton smaller corn reserve than a year ago. This is not at a point where rationing would have to take place, but it does remove many of the excess bushels the market had.

One factor that is negating some of this concern in global corn reserves is the use of alternative grains, mainly for feed. In the domestic market we have seen elevated use of distiller grains following the ban set on them by China. There are now thoughts China will move forward with regulations on sorghum that will deter imports of that grain as well. The availability of these stocks will limit how far cash corn values can appreciate even if futures do rally.

March corn finished the session up 1 cent at $3.66 , March soybeans closed 2 cents lower at $10.32, and March wheat in Chicago was 3 cents higher at $4.51.

For more information, you may contact Karl Setzer at 1-800-383-0003, extension 237, or e-mail at opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

Market Commentary provided by:

Karl Setzer, CTA
Grain Solutions Team Leader
MaxYield Cooperative
West Bend, IA 50597

Phone: 515-887-7211