Market Commentary

Sept corn up ¼ at $3.5275
Nov beans up 6 at $9.3125
The DOW is down
USD is stronger
Crude oil down $.16 at $46.62

Good morning,

Corn traders see very little in the U.S. weather forecast that will create a substantial drag on yield. The bears continue to point to recent widespread moisture and cooler than normal temps. The bulls are pointing to a wave of warmer weather heading our direction. Unfortunately, from what I can gather, the heat doesn't look like it will last for long, with temps forecast to quickly return back towards normal. Hence, no real nearby fear of widespread production problems. Don't forget, next week brings the media friendly "Pro Farmer Crop Tour". We suspect this event will gather a lot of headlines and either help confirm the USDA's recent 169.5 yield or fuel more controversy. Technically, CZ momentum continues lower where we have downside targets in the $3.60 to $3.55 range which is where the contract low and price count objective lie. Resistance starts at $3.76 where we left the close followed by the $3.82 area where the recent downtrend comes across.

SX showed some stability against $9.21 today but if that doesn’t hold we have targets to the next downside count around $9.00 which is consistent with a test of the contract lows at $9.07. Look for resistance starting from $9.50 to $9.55. Daily chart indicators are oversold and due to correct although weekly chart indicators are pointed lower.

Weekly ethanol production for the week averaged 1.059 million barrels per day, up +4.64% from last week and up +2.92% compared to last year. Stocks rose to 21.828 million barrels, up +2.25% from last week and up +6.87% from last year. Total corn usage is estimated at 111.20 million bushels.

Latest available U.S. trade data shows first-half exports of animal products year-over-year higher across the board. An increase in global demand and a decline in the U.S. dollar likely contributed to favorable conditions for exports. With the exception of U.S. exports of beef and veal, the largest share of which went to Japan, Mexico accounted for the largest share of U.S. animal product exports. On July 1, the U.S. cattle herd expanded to 102.6 million head, the largest since 2008. More cattle are available outside feedlots, and a larger calf crop will provide an ample supply of cattle for placement into 2018. Commercial beef production is forecast higher in 2018 to 27.4 billion pounds. U.S. beef exports for 2017 are revised slightly lower, and 2018 is unchanged. Larger second-half supplies of hog and pork are expected to clear the market at higher year-over-year prices. Third-quarter hog prices are expected to be $57-$59 per cwt, almost 18 percent above the same period last year. Fourth-quarter hog prices are expected to be $44-$46 per cwt, almost 22 percent higher than fourth-quarter 2016. Third- and fourth-quarter pork exports are forecast at rates almost 9 percent and more than 6 percent above year-earlier quarters, respectively.

From Kevin Bradley, associate professor in the University of Missouri's Division of Plant Sciences, an update on soybean crop damage caused by the herbicide Dicamba. Since the last report on July 19, the number of effected acres has increased to 3.1 million from a previous 2.5 million. Dicamba-related cases are being investigated by ag departments in 17 states. That number has also increased, from 1,411 less than a month ago to 2,242 as of August 10. The update notes that, “In comparison to the previous reports from just a few weeks ago, the number of cases under investigation in many states in the Midwest has at least doubled.” Check out the original report, ‘Ag Industry, Do we have a problem yet?’

Have a good day,

Brady, Darren and David

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