Morning Comments February 17, 2017
Friday, February 17, 2017, 8:02 AM
Submitted by: Landus Cooperative
The markets will be closed Monday in observance of Presidents’ Day. Normal trading hours today with markets resuming at 7:00 p.m. Monday. Three-day weekends typically result in a volatile trade afterwards due to three days of news & opinion hitting the market without any trade. This morning, both corn and soybean futures are trading lower as fund buying has slowed in the last 24 hours. Most news in the U.S. relates to freight struggles and export business moving away from the PNW and towards the center gulf (nothing changing the overall supply & demand picture – just a changing landscape on how we will move supplies around to where they are needed).
Corn: Funds are estimated to hold a net long of 50,000 contracts. Weekly export sales came in at a five week low of 31 million bushels which was down from 38 million bushels sold the previous week. So far the February average price for Dec corn is $3.97 which is up from February of 2016 price which was $3.86. Estimates are still showing corn acres planted this spring will be down 2 million acres. With the corn:soybean ratio still sitting at 2.56 for new crop futures (see chart below for historicals), there is growing economic rationalization for the “corn losing acres to soybeans” narrative.
Beans: The weekly export sales were well above trade expectations and that was the main reason for the early buying of beans yesterday. There are still 375 million bushels out there that are listed as sold but have yet to be shipped. The funds have produced a very long position and if they decide to liquidate there is plenty of downside potential in the market. Short term, if the Brazilian Real stays firm, international buyers will be keeping their pencils sharp watching the important spreads between the cost of U.S. Gulf and Brazilian soybeans.
Corn down 3-4 cents
Soybeans down 7-8 cents
December Corn : November Soybean Ratio Monthly Chart going back to 2006:
Weekly Brazilian Real Chart going back to early 2015: