Market Commentary

March corn up ½ at $3.495
Jan beans down 4 ¼ at $9.75
The DOW is up
USD is weaker
Crude oil is down $.42 at $56.18

Good morning,

Corn demand remains strong as U.S. exports are a bit more robust than many had been thinking. U.S. corn prices remain very competitive on a global scale. Ethanol production remains impressive, though slightly below the recent weekly record pace, yet sill extremely strong. Most sources believe we again chewed through between 114 and 115 million bushels of corn last week for use in ethanol. The unfortunate part of this ethanol surplus, though a bit lower than last week, is still running about +17% above last year’s level and has turned most plants negative for margins. Technically, the corn market is in a narrow range as we try to stabilize against the November lows. With downside counts just a bit lower at $3.46 ¾, we should see limited weakness from here. Topside shows from $3.55 to $3.57.

Soybean bears are talking about improved weather conditions nearby for parts of Argentina and southern Brazil. Thoughts at the moment are many areas will see improved moisture through the end of December, then things could turn dry again, to what extent and or how wide-spread the dryness...who knows? Bears are also talking about the USDA needing to further trim their U.S. export estimate by perhaps -50 to -75 million bushels. Yesterday’s small bounce has the bean market trying to correct the recent slide and oversold conditions. This should give us a chance to rebound into the $9.90 area on January. Expect problems there. The November lows at $9.67 key to an extended break. March should run into trouble near the $10.00 area.

Booming rates to ship iron and coal are giving grain traders a migraine. The cost of moving pretty much every dry-bulk commodity -- from fertilizer to salt to rocks -- has surged since July, lifting the London-based Baltic Exchange’s main freight gauge to its highest in almost four years. The rally has been fired by China’s insatiable demand for coal and iron ore, more than tripling rates for giant Capesize ships that dominate both trades. With the surge driving up shipping rate across the board, that’s bad news for agricultural traders already contending with the biggest supply gluts in years: they’re having to pay more to transport crops at a time when they can least afford it. As far as the shipping market is concerned, agricultural trade is dwarfed by the heavy industry bulwarks. Grains and oilseeds make up less than 10 percent of all dry-bulk cargoes whereas coal and iron ore account for about half.

It’s been a miserable few years for Florida’s orange crop. And now to add insult to injury, California is gearing up to steal the sunshine’s state crown as the king of U.S. citrus production. After a decade of the citrus-greening disease devastating Florida oranges, Hurricane Irma smashed into groves this year, inflicting yet another blow to the crop. Farmers in the state are set to collect 46 million boxes of the fruit this season, the U.S. Department of Agriculture said Tuesday. That would be the smallest since 1945 and would match California’s harvest. Michael Sparks, chief executive officer for Florida Citrus Mutual, the state’s largest grower group, expects the situation for the crop “to get worse before it gets better.” If that’s the case, and California ends up with the bigger crop, it would be the first time in 73 years the state would best Florida. (Source: Bloomberg)

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