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Karl Setzer Grain Commentary

Morning Comments; Friday, February 23rd, 2018

Grains are trading higher on the overnight session.

Trade continues to question current corn demand estimates. While the U.S.D.A. did increase corn exports in the latest supply and demand report, this number may simply be off-set in future reports. The one being questioned the most is feed demand, as some analysts believe this number is currently over-estimated. There are also thoughts that the South American crops are not as poor as reported and buyers will not come to the United States for as much coverage as predicted.

There is just as much uncertainty over projected soybean demand. For the past several years we have seen a high initial soybean carryout forecast, but the number then eroded all marketing year. It appears as though this year we are going to see just the opposite take place. The U.S.D.A. has cut its soybean export forecast by 125 million bu in the past two balance sheet updates, and likely will again. This will push soybean carryout to nearly 600 million bu this year, and possibly more.

While there have been several factors for the rally we have seen in the soy complex, one of the most predominant has been meal demand. Several of the world’s soy meal importers have been buying in that complex over concerns of a possible shortage of stocks due to Argentine weather. While this has supported soybeans, it has pushed meal values into over-valued territory. In turn this has turned some buyers to alternative feed products, mainly distiller grains.

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