Friday PM Market Comments 2/16/18
Friday, February 16, 2018, 6:02 PM
Submitted by: Landus Cooperative
A bit of a wild week in the corn and soybean markets as strength from Argentine weather concerns pushed our staple commodities higher. You know it’s been a long time since we’ve seen significant volatility when we consider a 38c gain in soybeans week-on-week “wild”. Soybean meal was the primary protagonist in our story as concerns mount around Argentina’s ability to execute on soymeal exports. It’s important to remember that Argentina is a major exporter of soymeal, not soybeans (six in one hand vs. ½ dozen in the other). The point is that the issue is / will be a meal shortage and the rally will be so driven domestically by soy crushers (where the rubber meets the road). It’s also important to note that there is some rain in the forecast for Argentina this weekend. There are no markets on Monday due to President’s Day, so Tuesday could be pretty volatile following the 3-day weekend. Overall, soymeal added 8.3% in value this week. Soybeans added 3.8% and corn added about 1%.
Other supporting actors helped push the bullish narrative along. The U.S. dollar is flirting with levels we haven’t seen since late 2015, making U.S. exports cheaper to world buyers. This has supported corn exports (which are still at low levels, but improving nonetheless). Crude oil has experienced a minor setback, but still holding steady above $60/barrel. And perhaps the strongest supporting actor in our current plot has been (drumroll please…)… the funds! Now, we all know the funds can switch sides pretty quickly, but right now they are liquidating shorts (buying them back). In fact, in the last 2 weeks, the funds have bought back nearly 190,000 contracts of corn and are only 10,000 contracts short as of today. Last week, the funds were 10,000 contracts short on soybeans and are now 42,000 contracts long.
All-in-all, this has presented a great opportunity for producers to price both old crop and new crop corn and soybeans. As we look ahead and navigate the volatility that awaits, it’s important to stay in touch with your Grain Marketing Advisor. Have a great weekend!