Morning Comments February 27, 2017
Monday, February 27, 2017, 8:02 AM
Submitted by: Landus Cooperative
Both corn and soybeans are steady to firmer this morning with corn even to a half cent higher and soybeans trading 2 - 3 cents higher at the early morning break.
Last week was ugly for soybeans, losing nearly 20 cents on the March contract. The CFTC report released Friday showed corn funds were net long 92k contract as of last Tuesday. This is more than the trade was expecting, but funds did sell off part of those long positions later in the week. Bean funds reduced their position about 16k contract to 154k long as of last Tuesday.
The USDA decreased corn acres from 94 million planted last year to an estimated 90 million acres this year. But, with an average yield estimate of 170.7 bushels per acre, 2017-18 ending stocks are projected at 2.2 billion bushels which is considered burdensome. With that, we are going to have a hard time seeing corn prices rally much without some U.S. weather issues over the next 4-5 months.
The trade is still concerned about uncertainties surrounding Mexico and the Trump administration. There are more stories about Mexico sourcing corn from Argentina and Brazil, securing supply to lessen their dependence on U.S. corn. There is nothing confirmed from the supposed discussions, but this would prove concerning for us as Mexico is the number one importer of U.S. corn. We are also seeing more corn from China going into Japan (another large buyer of U.S. corn) and an increase in bird flu issues that are causing a dip in demand.
The USDA is predicting record U.S. soybean acreage for 2017, estimating 88 million planted acres. Currently soybean traders are watching South American weather which is looking ideal for maturing and harvesting in Brazil, and despite hotter than normal weather in Argentina, there’s not much concern for their developing crop, even with the heavy rainfall they’ve seen recently. There’s not a lot of bullish news in the nearby for beans, but they are very dependent on cooperating weather, so a lot can change! With good global demand and supportive outside markets we could see the soybean market turn bullish, but time will tell.
Corn +1/2 to 1
Soybeans +2 to 3
Thank you for your business and have a great day!!