May corn unchanged at $3.8525
May beans up ¾ at $10.7175
The DOW is down
USD is stronger
Crude oil up $.04 at $61.29
U.S. stocks are a bit lower this morning and have given back most all of their gains from 2018. The good news is during the past 52-weeks the S&P 500 is still up +13%, Dow up +18% and NASDAQ up +26%.
The corn market is slowing down after meeting counts at $3.86. This should force a short term correction but this move should find support at the $3.80 level. Look for buying there. This is leaving the $3.90 area as resistance on rallies. That could be our near term range. December is turning a bit choppy as we approach counts at $4.08. Look for liquidation there as well. Support shows back near the $3.98 level.
“E-15” is still the topic du jour, as traders try to glean direction from President Trump’s comments after the latest biofuel policy summit. In brief, he appears to be pushing oil and ethanol interests toward a “grand bargain” compromise involving a “RIN price cap” for potentially-expanded access to E-15. The devil will be in the details as to whether this is a good deal or not; namely, what price will RIN’s be capped at? Also, what specifically will be arranged to expand offerings of the higher ethanol blends. If it’s just the “RVP waiver” carrot dangled for years in front of ethanol, it likely won’t accomplish much, especially within the context of a low RIN price cap. So far, the ethanol side of the deal does not seem to be too impressed and has pushed for more meetings this week. Ethanol trade remains virtually paralyzed; within the context of the “up” week in corn, producer margins have slipped back.
Friday’s rally has the bean market spiking into targets at the weekly high at $10.80. Look for a correction from here with support back near the $10.50 level. Expect liquidation against Friday’s highs. Look for a choppy short term trade here.
Brazilian soybean exports for February are down 18% on the year to 2.86 million mt, due to a slow start of the harvest as plantings were delayed, the Brazilian ministry of development industry and foreign trade reports. Exports tend to ramp up in February at the start of the Brazilian season and typically peaks in April and May. Meal and oil exports, however, were up significantly from last year, with meal exports for February nearly doubling on the year to 1.35 million mt, while oil exports were 125,600 mt, or 50,000 mt more for the same period last year. (Source: AgriCensus)
Improved crush margin has encouraged China’s domestic crushers to step up soy purchases, according to China National Grain and Oils Information Center. Crushers have only covered 70% of their needs for March loading and 30% for loading in April. China March soybean imports are estimated at 6.5 million metric tons. Crush margin climbed in late Feb. to the highest since Oct., according to Shanghai JC Intelligence data. The soy industry currently isn’t expecting any imminent action by the Chinese government on soybean imports after the White House announced tariffs on steel and aluminum. (Source: Bloomberg)
Canada and Brazil – not China – likely would suffer the biggest impact of any U.S. tariffs on steel, according to a 2017 report from the U.S. Department of Commerce. Canadian and Brazilian steel comprised a respective 16% and 13% of U.S. steel imports as of September 2017, while China, frequently criticized politically for dumping cheap steel on trade partners, actually only the 11th largest import country last year. Meanwhile, top foreign sources of aluminum during 2013-16 included Canada (56%), Russia (8%) and the United Arab Emirates (7%). Alcoa says “vital trading partners, including Canada, should be exempt from any tariff on aluminum. (Sources: Seeking Alpha, Statista)
Cultured meat producer “Just”, believes it will have the first commercially viable lab-grown or “clean” meat ready for public consumption by year’s end. We have been hearing a lot about the topic for some time now and “Just” looks to be the first company to overcome the cost, taste and sentiment issues that have kept it off the market. Remember the first lab-grown burger had a production cost of over $300,000 a few years back. Now, with advancements in technology and procedures, that cost has been slashed to a reasonable level. From what I understand, the initial offering will be a type of foie gras or chorizo or type of mushy composition. Meaning, we are years away from understanding how to incorporate the muscle and fat cells as well as the connective tissues in order to produce an actual “steak” in the lab. Interestingly, one of the final hurdles to overcome and by all accounts the most significant one before “Just” can sell its first burger is to find a substitute for the blood serum it uses to begin creating the new strain. The serum happens to be the source of protein the strain needs to develop and it is very expensive, not to mention it comes from the blood of a tiny cow, which doesn’t fit the social image the company is seeking to maintain. Keep in mind the company believes that having overcome the hurdles of cost, taste and its social agenda, they are now poised to grab market share from traditional meat producers. There might be another hurdle for “Just” and companies in the space as the United States Cattlemen’s Association recently filed a 15-page petition to the USDA asking for them to strictly define “meat” and “beef” as animals raised and slaughtered. The group believes labeling cultured products as meat will only confuse consumers. In the petition, the USCA mentions Memphis Meats, Just, and Mosa Meats, — three startups that are racing to bring lab-grown meat to market. Keep in mind that Tyson is invested in Memphis meats along with Bill Gates and Richard Branson. There is a lot of big money and consumer sentiment behind cultured meat, but from what I understand, lab-grown meat will one day, perhaps sooner than later, be economically sustainable and on the shelves at your local market. (Source: Wired, BusinessInsider)