News

Market Commentary

Sept corn down 6 ½ at $3.845
Aug beans down 7 ¾ at $10.055
The DOW is down
USD is weaker
Crude Oil down $.35 at $46.57

Good morning,

Corn maintained its winning ways, and in a much more confident fashion, too, finishing 8 cents higher by days’ end. Corn started the day with modest gains and never really faltered much, though the market did find willing sellers at times, particularly near the days’ highs. Managed Money traders were viewed buyers of another 10,000 contracts, which would take their net length in corn up to an estimated 35,000. Technically, CU extended its gains as the chart takes aim at the recent highs above $4.00. Daily chart indicators are turning up. A close above $3.94 ½ tomorrow puts the weekly chart into new highs as we negate last week’s reversal action. Support moves up to $3.80 initially. CZ closed back above $4.00 as the chart build for a challenge of the recent highs at $4.17 ¼. Daily chart indicators are turning up. Support moves up to $3.90 initially.

Export Sales yesterday morning actually weren’t awful – a major accomplishment for corn - arriving at a five week high. Old crop business of 466,500 metric tons and new crop sales of 212,100 metric tons easily topped subdued expectations of 300k to 500k mt total. Japan & Mexico accounted for most of the old crop purchases. Sold + Shipped for the current 16/17 corn marketing year to date stands at 56 mmt, which is very close to USDA forecasts for the year. On the world scene, the Saudis are in for 1.5 mmt of feed barley, while China sold 922k metric tons of reserve corn out of 982k offered (mostly 2014 vintage).

Elsewhere, the world scene remains little changed – South America harvest ongoing, while East Ukraine and portions of Europe remain too hot/dry. Rough day for ethanol, which once again was not able to keep up with a buoyant corn market. Spot margins are still leaning 5-10 c/gal profitable. Livestock and Dairy markets all closed markedly lower. The latest USDA milk production report (for June) found dairy production +1.7% higher on a yr/yr basis.

SQ have conquered $10.00 once again which clears the path for a challenge of the recent highs at $10.32 ½. It would be a big deal to take out that high and would activate counts to the topside, that trade has not been made yet. Support moves up to $9.85 follwed by the corrective low at $9.71 ¼. SX traded into the downside breakout at $10.30 as the chart appears poised for a test of the recent $10.47 high. Similar to Q, it would be a big deal to take out that high and that trade would activate counts to the topside, if you can make it. Support lies at $10.00 followed by the corrective low at $9.84 for now.

Domestic Brazilian ethanol prices rose this week after reports in the local media pointed to an increased chance of the federal government imposing higher taxes on gasoline, sources said. Talk of increases in taxes such as CIDE or PIS/Cofins have intensified in recent days as the government tries to meet budget targets, said financial newspaper Valor Economico. A combination of increases in both taxes is currently under discussion because a rise in the CIDE would only be effective 90 days after being signed, while a PIS/Cofins hike could be effective immediately, the newspaper added. While the CIDE tax would apply to gasoline only, a PIS/Cofins hike could impact both ethanol and gasoline, with the latter expected to see a larger increase than the biofuel. An increase in the gasoline taxes is expected to benefit the ethanol industry, improving the hydrous ethanol floor and helping the biofuel's competitiveness against the fossil fuel at the pumps. (Source: Platts)

Canada’s federal and provincial governments are partnering to provide nearly $5 million to help five local food processors expand capacity and improve efficiency so they can grow their businesses. The agri-food processors in Calgary receiving federal-provincial support include two meat processors - H. Hein Foods and Basha International Foods. The grants are made through Growing Forward 2 (GF2), a federal-provincial-territorial partnership with a mandate to drive an innovative, competitive and profitable Canadian agriculture and agri-food sector. In the past five years, GF2 has invested more than $406 million in Alberta's agricultural sector. (Source: The MeatingPlace)
The United States and China failed on Wednesday to agree on major new steps to reduce the U.S. trade deficit with China, casting doubt over President Donald Trump's economic and security relations with Beijing. The annual economic dialogue session in Washington ended with canceled news conferences, no joint statement and no new announcements on U.S. market access to China. The two sides had a "frank exchange" but failed to agree on most major bilateral trade and economic issues that were important to the United States, a senior U.S. official said on condition of anonymity because he was not authorized to speak publicly. These included U.S. demands for access to China's financial services markets, reducing excess Chinese steel capacity, reductions in auto tariffs, cutting subsidies for state-owned enterprises, ending Chinese requirements for data localization and lifting ownership caps for foreign firms in China, the official said. (Source: Reuters)

Global grain trader Bunge Ltd's sweeping plans to overhaul its business and cut costs may not be enough to compensate for weak earnings and could still leave it vulnerable to a new bid from diversified rival Glencore PLC. Bunge, the smallest of the listed global grains traders, rebuffed a bid from Glencore in May but its admission on Wednesday that second quarter earnings would disappoint has opened up the possibility that Glencore might make another approach, analysts said. If Glencore, whose market capitalization is more than five times Bunge's $11 billion, does make a second attempt and is successful, it would be the industry's largest shake-up in decades and redraw the global food supply chain. It was Bunge's own chief executive, Soren Schroder, who in May suggested consolidation among the grain traders was coming - and even said his company could lead it. Glencore, best known in metals and energy trading, has so far been one of the most active players, setting its sights on expanding its agricultural commodities business. It pursued Louis Dreyfus' grains business in recent years but failed to strike a deal. (Source: Reuters)

North Korea is facing severe food shortages due to the worst drought since 2001 with food imports needed to ensure children and the elderly do not go hungry, the United Nations' food agency said on Thursday. The Food and Agriculture Organisation (FAO) said rainfall in key producing areas fell well below the long-term average between April and June and badly affected staple crops including rice, maize, potatoes and soybean. This disrupted planting activities and damaged the 2017 main season crops, according to an FAO report. The FAO estimated that early season production plunged over 30 percent from the previous year, and the situation would worsen during the 2017/18 marketing year, with cereal imports and food aid likely to increase as a result. (Source: Reuters)

Have a good day,

Brady, Darren and David

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