Is it a February low or just a lull?

Published on: 16:45PM Feb 20, 2019

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One piece of news released yesterday was the Commitment of Traders, which has now been brought up to end of January totals and as it turns out that during the blackout period, funds were steadily unloading what had been a bullish position in corn.  In the middle of December, they were long around 128,000 contracts, and according to the update, as of January 29th, they were down to just over 6,200 contracts long.  Extrapolating the activity since and including yesterday, it is estimated that they could now be short as much as 70,000 contracts.  While this would at least partially explain the sideways/defensive action in the corn market during this period, I would suggest this may be a good thing.  We are moving into that time of year when the trade focus begins to shift to the next growing season, and while yes, most are expecting to see an increase in corn acreage this coming year, we still have all the growing risk ahead of us.  That will often translate into higher markets as we build some level of “risk premium” back into the price.  I for one believe that once we have transitioned to March, we should emerge from these wintery blues and begin focus on the “what-ifs” of growing the next crop, which should translate into higher price from here. 


U.S. wheat just cannot seem to get a break (no pun intended) in the world market.  We finally reached competitiveness with Russia and France stepping in to occupy the low-price position and we have not been able to capitalize on the short crop in Australia either.  It turns out that Indonesia (2nd largest wheat importer in the world) and other Asian importers have been able to turn to Argentina for the product. In the early overnight trade, Chicago wheat did try and bounce, but after it was announced that the U.S. was not going to partake in the Egyptian GASC tender this week, the rug was pulled out from price once again. 

About the only thing that leaves for this week will be export sales (delayed until Friday morning) and the USDA conference.  According to this initial survey I have seen, the trade is expecting corn acreage to come in around 91.7 million, up2.6 million from last year with production of 14.889 billion, versus 14.420 last year.  For beans, they are expecting acreage of 86.1 million, down 3.1 million giving us a crop of 4.296 billion compared with 4.544 this last year. Finally, total wheat acreage is expected to be tally 47.2 million, down 600,000 and total production of 1.890 versus 1.884 last season.