Morning Comments

Mar corn +1 ¾ at 4.94

Mar beans +6 ¼ at 13.7875

The DOW is Down

USD is UP

Crude oil +.45 at 52.70

 

Good morning,

 

Overnight grain markets were mixed but head into the morning break modestly higher with the crop report looming large at 11 am cst.

The USDA reported a sale of 120 tmt of old crop beans to unknown at 8 am. This is another 3.2 million bushels to bring the total old crop sales in recent days to 21.7 million bushels when our carryout on avg. estimated at 139 million bushels heading into the report. Higher prices are needed to create sticker shock and shut off new sales.

Market sentiment surrounding the report is very bullish and the now the onus is on the USDA to satisfy that expectation or else there are plenty of new longs that will be looking to exit. In the case of soybeans, the stats are simply too tight for anything other than a near term corrective trade and are supportive of an elevated price structure going forward. If the USDA delivers with any bullish surprise, you could see a daily 70 cent limit move today.

Cordonnier left Brazil soy and corn production estimates unchanged at 128 mmt and 102 mmt respectively with a neutral to lower bias. He lowered his Argentine corn production estimate by 500 tmt to 44.5 mmt and left his soy production estimate unchanged at 46 mmt with a neutral to lower bias going forward.

There is a major USDA crop report at 11 am cst. With a broad brush, the market is anticipating a combination of lower us row crop production and increased demand that will tighten domestic ending stocks. The avg. guess on corn ending stocks tightens from 1.702 bb in Nov to 1.599 bb, bean stocks from 175 mb to 139 mb (this would represent a 3.07% stocks to use ratio, the lowest since 13/14 marketing year that ended at 2.67%) while wheat stocks are seen nominally smaller at 859 mb. The Dec 1 quarterly stocks are estimated at 11.951 bb for corn, 2.920 bb beans ant 1.695 bb for wheat. Winter wheat acres are est. at 31.528 mln overall with hrw at 22.140 mln, srw 5.884 mln and white wheat at 3.514 mln.

 

Overnight, the corn market started a little weaker, but firmed back up in the wee hours of the night, ultimately finishing a couple cents higher by the morning pause. Wheat is likely the pre-report market feature, trading 10+ higher after Egypt’s tender found only a few competitive offers. In the end, it will be all about the report, and there will be a lot of ground to cover; U.S. production, updates on the domestic and world balance sheets, and Quarterly Grain Stocks (a/o Dec 1). After an 80+ cent rally over the past month (and $2 since early August), most traders are expecting the USDA to report tightening statistics. The analyst consensus is looking for a further trimming of production (to 14.470 bil bu, from 14.507 in Nov/Dec), another uptick in demand (exports?), and a resulting downtick in U.S. corn carryout projections (1.6 expected vs. 1.7 in Nov/Dec). In a sense, the Dec 1 stocks number will incorporate elements of all these and is a logical first headline to study. Analysts expect Dec 1 stocks to land 11.95 billion versus 11.327 in the prior year quarter. Will the USDA find or lose ‘phantom bushels’ (they ‘lost’ them in the prior report)?! Somewhat secondary perhaps will be the world stats; the USDA may start to walk back South American crop production estimates. Analysts expect world corn carryout to come in at 289 mmt versus 283.5 mmt in Dec (and 303 mmt the prior year). Week 3 options, which expire this Friday, are pricing in a ~22 cent weekly move.

 

Darren, David, and Elizabeth

Morning Comments

Dec corn +2 ¾ at 4.19

Jan beans +17 ¾ at 11.7125

The DOW is UP

USD is Down

Crude oil -.55 40.79

 

Good morning,

Overnight grain markets featured upside gaps in corn and beans that remain in place this morning with wheat lagging in a mixed trade. After a brief cup of coffee at $11.50, Jan beans are off into new highs with our longstanding $12.00 target area just ahead. The $12 objective is justified by our current market fundamentals but any substantial cut to the South American crop this season could easily add dollars to the price of beans from here. The bull spreads are showing stability up front after Jan-March widened out to a carry yesterday for the first time in two months. Meal is gaining sharply on oil in the oil share spread with both products in positive territory.

The buying is fueled by South American weather concern where dry conditions and only limited relief at best showing in the forecasts for some key growing regions. In a La Nina year, the markets will be ultra-sensitive to weather threats, particularly when the tight global balance sheet for soybeans is counting on record production out of the southern hemisphere to replenish the pipeline. There is talk of China kicking the tires on additional US corn purchases but nothing to confirm the rumor yet, we think it is a matter of when, not if.

The outside markets have the dollar trading -.31 to 92.32 and threatening to break down the September spike trade extending to 91.75. The reality is, the currency may be friendly to market sentiment but has little bearing fundamentally in a rationing market which is where soybeans are headed.

Cordonnier lowered his Brazilian corn production est. by 2 mmt to 106 mmt with a neutral bias going forward due to dryness in S Brazil on first season yield potential and delays in planting the Safrinha crop later on. He left the Brazil soybean production unchanged at 132 mmt with a neutral bias. He lowered Argentina soybeans by 1 to 50 mmt on dryness with a neutral bias and left corn unchanged at 49 mmt, again with a neutral bias but noting dryness concern.

US soybean harvest advanced 4 to 96% complete. This time last year 89% of the crop had been harvested, and the average for this date is 93%. Kentucky, Arkansas, North Carolina, and Tennessee remain the few states that are lagging.

Overnight, the corn market was mostly better, finishing a couple cents higher by the morning pause. Beans are the star of the show early, as they so often are, gapping higher on the Monday night open and posting double-digit gains. South American weather was said to take a dryer tilt on model runs after-hours yesterday, driving the enthusiasm? The grain half of the news is a little less thrilling. Private analysts at APK-Inform pegged the Ukraine corn crop at 31.8 mmt, 25.2 of which would be made available for export. Both are slightly above the aggressive USDA forecast downgrades from November. There was a little export business around, including South Korea’s KFA picking up another optional origin corn cargo, this time for FH June and paying $242.70/mt. For the first time in over one week, there was an 8 AM flash sale – 195,000 metric tons of U.S. corn to Mexico. Still no ‘official’ word on additional Chinese purchases despite such rumors around the past several sessions? Crop Progress data after the close found 95% of the U.S. corn crop harvested, up +4% wk/wk, and +8% ahead of average. Only two states were running behind average; Ohio was the most notable at 5% behind, but within that represents significant catch-up over the past couple of weeks. Outside markets are a little softer to start today on classic ‘Turnaround Tuesday’ action. Overall, they are handling the uptick in Covid cases well, though corn end-user markets are not. Ethanol barely finished in the green yesterday, dragging spot margins close to breakeven (from consistent 5-10 c/gal margins since May), while Dec milk futures have sold off more than 15% in four days.

 

Darren, David, and Elizabeth

Morning Comments

Good Morning   

 

Current Markets as of         8:00     Monday, November 16, 2020

 

Month                        High                                 Low                               Change                                    Last

Dec 20 Corn               $4.13 ¼                      $4.09                              $ + 2 ½                                   $4.13                                                                

Dec 21 Corn               $4.07 ¼                      $4.03 ¼                         $ + 2 ¼                                   $4.06 ¾                                                                          

Jan 21 Beans              $11.54 ¾                    $11.46 ½                        $ + 5                                       $11.53                             

Nov 21 Beans             $10.46 ¾                    $10.39                            $ + 5                                       $10.45 ¼      

 

  

Oil    $17     Higher      Gold   $1,730   Higher     Dow $23,425   Higher      Wheat $5.63 Higher 

The Des Moines ethanol low rack price is $1.1139. This is $0.0970 lower than the unleaded gas low price of $1.2109 

US corn harvest is expected to be near 95-97% complete in this afternoon’s progress report

AgRural estimates 82% of Brazil’s first corn crop is planted now

US farmer selling is slowing down with harvest wrapping up and the recent pull back in the futures market.

 

NOPA crush is out today with avg trade guess of 177.1 mln bu and soyoil stocks of 1.448 bln lbs.

Argentine soy oil prices continue to move higher as India, the largest veg oil importer, shifts away from palm to soy oil imports. Malaysian palm oil futures have hit 8 year high (low yields) while soy oil is pushing to 5 year highs.

Mato Grosso, the main state, is 94% complete and near avg. Some chatter about need to replant in dry areas but that’s less than 1% at this point

 

Dec Corn Support is $3.90 and resistance is $4.20.  Jan Bean Support is $10.75 and resistance is $11.18. Funds bought 50 Million (10,000) contracts of corn and bought 50 Million (10,000) contracts of beans Friday. Just under 152,000 contracts traded last night.

 

Weather:  Argentina saw good rains over the weekend, shifting west/southwest over the next ten days, with the center-east again trending drier; Brazilian precipitation was scattered from SW to NE over the past 72 hours with better coverage ahead this week, then drier (especially south) for the 6-10 day time frame

 

OPENING CALLS:

 

Corn:  Higher trade on demand, weakness in the US$, and strength in outside markets

Beans:  Last week’s highs appear to be hanging in there on decent demand and SA dryness.

 

Have a Great Monday!   Darren, David and Elizabeth

Gold-Eagle Cooperative Providing Quality Services and Products Innovatively, Profitably, and Professionally. 

Morning Comments

Dec corn -3 ¼ at 4.14

Jan beans -4 ¼ at 11.4825

The DOW is Down

USD is Down

Crude oil +.33 at 41.78

 

Good morning,

Overnight grain markets traded lower as we work to correct overbought technicals and CIF corn and bean weakness reflect a slowdown in export demand at these elevated price levels. There were no 8 am sales announce today, weekly export sale will be released tomorrow morning due to Veteran’s Day.

Underlying concerns over South American dryness and possible production shortfalls in a La Nina growing season should continue to underpin row crop prices and limit the downside to corrective clean up trades where we are carrying not only excess, but near record fund length. The trend of tightening supply continues and if the market sense that weather is going to reduce new crop production in the southern hemisphere it would act as gasoline on the fire. Short bought end users should be looking to extend coverage on these breaks.

CIF bean bids at the Gulf continue to slip with bids down another 8 cents to +61 reflecting the slowing export interest in part as a result from higher prices, but also with China having already secured most of what they need to bridge the gap to cheaper Brazilian new crop supply. Interior bean beans are mostly steady.

Overnight, the corn market was a little easier, finishing three cents lower by the morning pause. The Goldman Roll, combined with some weakness in the CIF market, has conspired to weaken the Z/H spread, which in turn appears to have made overextended bulls a little nervous? Today is Day 5, the final day, though it is not unusual to see spread interest extend for another day beyond? Since the end of October, Z/H has moved a dime lower, half of which has taken place over the Roll. With the report out of the way, market focus shifts back toward export demand and South American weather, the latter of which has only grown in importance given the perception of tightening carryout. Over the next week to ten days, Brazil gets the better of the precip deal, with most of the country receiving at least some rain at one time or another. Argentina leans dry, both in the short-run and in the forward outlook. Some timely showers will help crops in the west and far north, while net drying in the central and eastern parts of Argentina could really stress crops, perhaps eventually forcing some replanting. The weekly EIA petroleum and ethanol report will be released later this morning, delayed one day due to the holiday. Ethanol production should continue to rebound post-maintenance, likely to the tune of a 1% wk/wk increase. Demand should also bounce back, which should keep ethanol stocks from building too much. Ethanol sold off yesterday; spot crush is still slightly positive (5-10 c/gal), while forward margins are implied at negative values for most. This has effectively been the case since May days.

 

Pork Processor Don’t Anticipate Return of Disruptions: A spike in COVID cases is raising concerns that processing plants could see disruptions again. Minnesota Pork CEO David Preisler tells Brownfield he’s been keeping a close eye on the situation. “From what we’ve seen so far, have there been cases? Yes. Have there been large spikes within packing plants? No, (at least) not in comparison to what we saw earlier this year.” Preisler says the pork sector—while not medical professionals–believes a certain level of immunity has been built up among packing plant workers. “So we have not seen, at least in the Upper Midwest, problems that have resulted in backups of pigs over the past couple of months.” Processing facilities added several safety measures in an effort to prevent the spread of COVID-19 within plants. Daily slaughter totals are running about 95 percent of capacity.

 

Darren, David, and Elizabeth

Morning Comments

Dec corn +4 at 4.115

Jan beans +6 ¾ at 11.1725

The DOW is UP

USD is UP

Crude oil +.46 at 40.75

 

Good morning,

Overnight grain markets traded higher, led by beans and corn ahead of an anticipated friendly crop report.

The USDA crop report is at 11 cst. The avg. trade estimates for the crop report show bean yields slipping to 51.6 bpa for a crop of 4.251 bb vs.51.9 bpa and 4.268 bb in October. Analysts are projecting a bump in exports from 2.2 bb with the ending stocks forecast at 235 mb, down from 290 mb in October. On the world stage, ending stocks are est. at 87.44 mmt from 88.70 in October. In general, the trend of tightening balance sheets is expected to continue and with a stocks to use ratio on beans at about 5%, the function of the market is to ration demand through higher prices. Beans appear to be getting comfortable with $11 but our price count target remains closer to $12. Complete report ranges and estimates are posted below.

The USDA reported a new sale of 130 tmt of corn to S Korea for 20/21.

US soybean harvest progress advanced 5 to 92% complete compared to the 5 year avg. of 90% but behind the trade expectation of 94%. Kentucky, Arkansas, North Carolina, and Tennessee are the few states that are lagging. Corn harvest moved up 9 to 91% complete. This time last year, 62% of the crop had been harvested, and the average for this date is 80%. The only state lagging average is Ohio, which is 64% complete (12% behind average).

Brazil saw some welcomed rains fall in Mato Grosso, Mato Grosso do Sul, Parana, and parts of Goias but remained mostly dry elsewhere. Argentina rains were limited to the South. The forecast shows better rains evolving for Brazil over the next couple of weeks but the far South of Brazil and much of Argentina appear to miss out.

Overnight, the corn market was mostly higher, finishing 3-4 cents better by the morning pause. It’s report day, and it is arguably a crop report that has more questions than answers when it comes to content. At this point, the November report is usually an afterthought, but given all the late issues surrounding this year’s crop, remains rather relevant. Most analysts expect another downtick on corn yields; average guess is for 177.7 bpa versus 178.4 in October. This (along with higher demand, apparently) is expected to trim U.S. carryout forecasts by roughly 150 million bushels to 2.033 billion. Fairly straightforward, as opposed to the world data, which is ‘in flux’ from our chair. The number one question is China; the USDA published new attache data raising their corn imports (and ending stocks??), but it was only published last week – perhaps not enough time to make it into the Nov report? Ukraine is likely due for a modest trimming of output and exports. It is probably too early for the USDA to make adjustments to South American corn? Brazil’s CONAB was out this morning, raising soy production estimates but trimming corn very slightly (104.9 mmt vs 105.2 prior est and 102.5 last year). There was a little ‘other’ news around; South Korea’s KOCOPIA was the latest user there to bite for corn, taking 60k optional origin. Korea was in for 130,000 U.S. corn at 8 AM? Note that tomorrow is a gov’t holiday (Veterans Day); this will push the weekly EIA report to Thursday and the weekly export sales data to Friday.

 

Darren, David, and Elizabeth

Morning Comments

Dec corn – ½ at 4.0625

Jan beans +8 at 11.095

The DOW is UP

USD is  UP

Crude oil +3.50 at 40.64

 

Good morning,

Overnight grain markets woke up to great news on the Pfizer/BioNTec vaccine large scale trial that produced better than 90% immunity response, no serious safety concerns and they will seek emergency use authorization later this month. There is some light at the end of the covid tunnel. Equities and energies rallied sharply on the news and its implications for energy demand going forward, the dollar is slightly higher while metals and bonds broke sharply to the downside. The grains feature the soy complex leading the way topside with beans and soybean oil making new highs for their rallies, including a new contract high for beans. Soybean oil is challenging its contract high from January to 36.41 while meal continues to battle with overhead in the $390 to $400 area. Corn and wheat are mixed early on.

Weekend rains in Brazil and Argentina were limited and spotty although the forecast shows better rains in the near term to support better planting and early development with the La Nina battle just getting started. AgRural sees Brazilian soybean planting at 56% up from 42% a week ago.

The USDA crop report is tomorrow at 11 cst. The avg. trade estimates for the crop report show bean yields slipping to 51.6 bpa for a crop of 4.251 bb vs.51.9 bpa and 4.268 bb in October. Analysts are projecting a bump in exports from 2.2 bb with the ending stocks forecast at 235 mb, down from 290 mb in October. On the world stage, ending stocks are est. at 87.44 mmt from 88.70 in October. In general, the trend of tightening balance sheets is expected to continue and with a stocks to use ratio on beans at about 5%, the function of the market is to ration demand through higher prices. Beans appear to be getting comfortable with $11 but our price count target remains closer to $12. Complete report ranges and estimates are posted below.

Overnight, the corn market had mixed feature, trading both sides of unchanged before finishing fractionally lower by the morning pause. No, you don’t need to adjust your quote monitor; the Dow is really up 1,700 points, Crude Oil is really $3 higher, and Gold is $70 lower. The big news of the morning came from Pfizer, who said they have a Covid-19 vaccine that is 90% effective. By contrast, the seasonal flu vaccine is 40-60% effective? The good news has an obvious ‘risk-on’ bias, though it is not clear how the grains will respond, as they were tentatively lumped in the ‘stay at home’ bucket by some. In the big picture, it should be favorable via corn’s ethanol tie, though it is important to keep in perspective that it will take months (perhaps many months) to roll this vaccine out to everyone. Stay tuned! We also have a November WASDE/production report tomorrow, which takes on unusual importance (usually Nov is a quiet affair). After the close, the USDA released its bi-annual ten year “baseline” S&D projections, which are rough forecasts used for gov’t budgetary purposes and generally do not generate much of a market response. The highlight as per usual was the acreage mix for next year (21/22); they projected 90 million corn acres, down slightly from 91 this year. The USDA did project gentle increases in corn exports moving forward, increasing roughly 50 million bushels each year starting in 22/23. On the other hand, they see ethanol usage growing 75 million bushels in 21/22 to 5.125 bil but flattening-out thereafter. Trend-line yields (198.5 bpa in 30/31!) would result in increasing carryout? Today is also Day 2 of the Goldman Roll, which may keep some pressure on Dec relative to March Corn.

Brazil Paves Way for U.S. Soybean Imports: Brazil’s agriculture ministry has issued a regulation facilitating imports of genetically modified (GMO) soybeans from the United States, it said in a statement in response to questions from Reuters. Brazil earlier suspended import tariffs on soybeans, soymeal, and soyoil from countries outside the South American Mercosur trade bloc. Since then, at least one U.S. soybean cargo was sold to Brazil but since some U.S. GMO traits lack approval in Brazil, major exports were not thought to be a strong possibility. The ministry of agriculture’s rule was published in the official gazette on Nov. 4. Brazil is poised to import 1 million metric tons of soybeans this year, according to a forecast by Brazil’s oilseeds crushing group Abiove, the highest volume since at least 2008. So far this year, Brazil imported 528,000 metric tons of soybeans, mainly from Paraguay, the most since 2014, according to government trade data.

 

Sweden Raises Bird Flu Risk Assessment: Sweden has raised its assessment of the risk level for bird flu to elevated from low, after outbreaks registered elsewhere in Europe, the Swedish Board of Agriculture said on Friday. The Board said in a statement that it had raised the risk level to 2, meaning all poultry must be kept indoors, from level 1, which indicates that the infection risk is low. France said on Thursday it was putting part of the country on high alert for bird flu and Sweden’s neighbor Denmark raised its bird flu risk level to high after outbreaks in Germany, the Netherlands and Great Britain.

 

Darren, David, and Elizabeth

Morning Comments

Dec corn + ¼ at 4.095

Jan beans + ½ at 11.0425

The DOW is Down

USD is

Crude oil

 

Good morning,

Overnight grain markets were mixed but come into the break trading steady to a touch higher. It has been an important week for the market because the rallies back have not only negated the poor technical signals from last week but in the case of beans, we have an outside week up (with a close here) into new highs. The strength in the soybean market this week comes in anticipation of a further tightening on US and global balance sheets in next week’s crop report along with weather uncertainty in the southern hemisphere. The forecasts do offer some relief but also feature plenty of holes in coverage the next couple of weeks.

The USDA reported four new export sales this morning at 8. 132 tmt of beans to China. 272 tmt of beans to unknown. 207 tmt of corn to unknown. 30 tmt of soybean oil to S Korea. All for 20/21. The bean sales were rumored in the trade the past couple of days.

In the product trade, meal is slightly higher and oil lower to start the day. Meal is attempting to extend its rally into new highs while oil is attempting to defend its move into new highs yesterday. Palm oil closed -.84% with a reversal out of a new high established yesterday.

The Buenos Aires Grain Exchange estimates Argy soybean planting at 4% complete out of a projected 17.2 million hectares, about half of what was planted this time last year. They est. production at 46.5 mmt compared to 49.5 mmt last year.

Zero soybean deliveries with 150 certs cancelled as we wind down deliveries and the November contract set to go off the board in a week. SX-SF back at a carry this morning. Bean basis is widening is out in some interior markets by a nickel (Cedar Rapids, IA and Decatur, IL) along with Gulf export bids dropping by 8 cents to +75.

US jobs data better than expected with non-farm payrolls in Oct. +638k vs. +530 expected and unemployment dropping to 6.9% vs. 7.7% expected. The dollar continues lower -.21 to 92.30 and poised for a challenge of the September spike low to 91.75.

USDA baseline tables to be released this afternoon which will include the first peak at their acreage projections for the spring, for what that is worth.

Overnight, the corn market was surprisingly quiet, straddling either side of unchanged, finishing fittingly steady by the morning pause. Heading into “Big Friday”, corn is on track for ten cent weekly gains. It is also a relatively quiet news day; outside markets are a little more mixed after a ‘risk-back-on’ stampede over the past couple days – stocks are flat/weaker, crude is lower, the dollar is trying to creep lower still. The tilt back toward “La Nina” dryness in South American forecasts continues to underpin the corn and soybean markets after a couple of good weeks. Though the full report had still not apparently been made available, some headlines coming out of the USDA Attache’s report on China stirred some interest yesterday evening. Media reports suggested the USDA was finally prepared to update their thoughts on China corn imports; they apparently raised the 20/21 total to 22 million metric tons (from all origins) versus the oft-criticized 7 mmt prior level. Judgment call, but this is probably toward the low-end of what most in the trade are expecting at this point? It is also not clear if this data will be included in the latest WASDE report, which is due out in just two business days? One more thing to monitor in the report, we guess, though we suspect in isolation, this may not have much of an impact on bottom-line carryout forecasts (since U.S. exports are not allocated by country, they can theoretically go to anywhere – including China). Goldman fund roll out of December contracts starts-up today, which could influence spread trade. After the close, the USDA will publish their ‘baseline’ statistics, which is a quick and dirty ten year S&D used for gov’t budgetary purposes.

We think markets could be violently mixed for a time, as bears worry about Covid and bulls promote strong export potential. Add to that a somewhat unsettled world weather situation, and we have a volatile brew! As expected, corn found some support near $3.90. By the same token, we would expect some liquidation at or near last Tuesday’s gap area of $4.15 CZ, which happened yesterday.

Thursday was another positive day for the corn market, though unlike Wed’s late-inning rally, the highs were made mid-morning with enthusiasm waning some as the day dragged-on. Corn finished the day with 3-4 cent gains; CZ finished eight cents below the session’s high. Managed Money traders remained on the ‘buy’ side, picking up another 25,000 corn, which would leave them net long just under 300,000 contracts. CFTC will offer a welcome update to this tally tonight. Cash trade was headlined by a modest bounce at the Gulf after a week-long drubbing. Though somewhat old news (as per usual), the weekly export sales report helped corn race out to those early Thursday gains. Old crop (20/21) new sales of 2.611 million metric tons (mmt) were 75% above the prior four week average and toward the very high-end of analyst expectations. Mexico was the big buyer of note (they also picked up 541k for new crop), followed closely by unknown (782k), China (210k), South Korea, and Colombia. This leaves outstanding corn sales at a whopping 26.335 mmt, which is more than triple the amount of sales on the books at this time last year (granted, last year was a sluggish one!). Though shipments to date have been behind trend, we suspect they will pick up soon, especially given the growing diversity of export originations. There was a small 8 AM corn sale today after a fairly quiet week; 206,000 metric tons to ‘unknown’.

Germany Confirms Bird Flu on Poultry Farm: Bird flu of the type H5N8 has been found on a poultry farm in the northern German state of Schleswig-Holstein, the state’s agriculture ministry said on Thursday, after it has already spread among the wild bird population in the region. Eight chickens died within a short time on a farm in the state, the ministry said, adding that the rest of the poultry on the farm had been culled and disposed of professionally. The Dutch Ministry of Agriculture on Thursday ordered the culling of 200,000 chickens after highly pathogenic bird flu was found at a farm in the eastern town of Puiflijk and Britain on Monday ordered a cull of 13,000 birds at a farm in Frodsham, Cheshire, after detecting cases there.

Global Food Prices Continue Surge: Global food prices remain on a tear as tightening crop markets boost grain costs by the most in eight years. A United Nations gauge of food prices rose for a fifth month to the highest since January, nearing a multiyear peak set just before the coronavirus crisis took hold. Last month’s increase was largely fueled by a rally in grains, with the UN’s Food & Agriculture Organization cutting estimates for crop production and stockpiles as adverse weather threatens corn and wheat supplies. The FAO’s gauge of grains prices jumped +7.2% in October to the highest in six years, pushing up global food costs by +3.1%. The FAO lowered its estimate for grains output in the 2020-21 season by about -13 million tons to 2.75 billion tons and trimmed its inventory outlook by almost -14 million tons. Vegetable oils, sugar, and dairy prices also climbed last month.

 

Darren, David, and Elizabeth

Morning Comments

Dec corn +8 at 4.1325

Nov beans +18 ½ at 11.0475

The DOW is UP

USD is Down

Crude oil -.24 at 38.91

 

Good morning,

Overnight the ag markets were quite firm, benefitting from a strong finish Wednesday; corn would finish 6–8 cents higher by the morning break in old crop positions. Corn finished just two cents away from last Tuesday’s ‘gap lower’ trade – will be interesting to see if this functions as a magnet or resistance? Outside markets remain on a positive footing, eyeing what appears to be a favorable political outcome (divided government). The tilt back toward “La Nina” dryness in South America has been a factor since the start of the week and continues to offer the market significant support. The weekly export sales report helped corn extend modest overnight gains with another strong showing. Net new old crop sales of 2.611 million metric tons (mmt) were 75% above the prior four week average and toward the high-end of analyst expectations. Mexico was the big buyer of note (they also picked up 541k for new crop), followed closely by unknown (782k), China (210k), South Korea, and Colombia. This leaves outstanding corn sales at a whopping 26.335 mmt, which is more than triple the amount of sales on the books at this time last year (granted, last year was a sluggish one!). Though shipments to date have been behind trend, we suspect they will pick up soon, especially given the growing diversity of export originations. One point of note is that this is somewhat old news; the pace of 8 AM sales announcements has slowed dramatically this week (106k mt to sorghum only today). Market is also positioning for Tuesday’s USDA November crop report, with wire services starting to publish analyst surveys overnight.

With the voting booth closed and the streets relatively calm, Wednesday was ‘get me back in’ day. Corn traded either side of unchanged most of the session but caught a bid mid-morning and ultimately finished 4-5 cents higher. Managed Money traders were likely the major buyers as they look to reestablish abandoned length, picking up roughly 20,000 corn Wed. This would leave them net long at least an estimated 270,000 futures and options going home tonight. Cash markets were headlined by the continued sharp downswing in Gulf values, but the interior had equal amounts of gainers and losers.

The weekly EIA report leaned a little bearish for ethanol but could be construed slightly positively for corn. Ethanol production added +2.1% this week to a 961,000 bbl/day rate, which would consume 5.09 billion bushels of corn over a marketing year. Imports made a surprise appearance and domestic demand was light, but an implied uptick in ethanol exports helped keep inventory from building much (just +0.4% this week to 826 million gallons, which is still perilously close to a four year low). Not a great day for the crush; ethanol finished close to flat, which would imply spot margins move to only ~15-25 cents/bu processed, or 5-10 c/gal, both including fixed costs. This is down about 10 c/gal from recent highs. Tough to say what the elections portend for this sector, though we note the EPA will come out with 2021 biofuel targets soon.

Overnight grain markets traded higher led by beans trading into new contract highs above $11. Technically, between yesterday and the overnight, the gaps in corn, wheat, beans, and meal have all been closed. The strength is supported by anticipation of further tightening on US and global balance sheets in next week’s crop report along with weather uncertainty in the southern hemisphere. In a La Nina year the markets are very responsive to a dry start to the season although the forecasts do offer some help and production expectations still remain strong at this early point. The weather concerns have overshadowed a slowdown in daily export sales announcements, perhaps because you already have over 81% of our projected soybean export program booked just two months into the marketing year.

There is talk of China kicking the tires on some additional US soybean purchases but with Brazil planting rapidly catching up, additional US sales are expected to be limited to filling in the back end of their seasonal buying program. The USDA reported new daily sales of 106 tmt of sorghum to China and 33 tmt of soybean oil to India – both for 20/21.

The US election remains unsettled for now, but equities are sharply higher while the dollar is down -.81 and lending some additional macro fuel to the grain rallies.

Weekly export sales featured a big number in corn at 3.15 mmt combined, wheat sales of 597 tmt, beans 1.531 mmt, meal 332 tmt and oil 7 tmt were each within expectations. In China’s shopping cart this week, they bought 212 tmt of corn, 341 tmt of sorghum including 98 moved over from previously announced unknown sales, zero wheat, 811 tmt of beans including 579 from unknown and a cancellation of 67, 47 trb of cotton including a cancellation of 38 in the old crop with new sales of 9 trb in the new crop, 3.6 tmt of beef and 10.3 tmt of pork.

 

Outstanding soybean sales on the books stand at 31.853 mmt compared to 11.565 mmt this time last year. Of that total, China is earmarked for 14.686 mmt with unknown for another 10.503 mmt. Accumulated exports marketing year to date total 16.648 mmt compared to 9.334 mmt this time last year. Combined sales plus shipments total 48.501 mmt, or 1.782 billion bushels. This represents 81% of our projected 2.2 billion bushel export program for the year, just two months in.

 

Darren, David, and Elizabeth

Morning Commentary

Dec corn down 1 ½ at $3.77

Nov beans down 4 ¼ at $10.3925

The DOW is down

USD is stronger

Crude oil down $1.07 at $40.04

Good morning,

Corn bulls will be trying to add on to last weeks +10 cent gain and six month high in price. The hope is that Chinese demand remains strong and upcoming South American weather a bit uncertain. Bears are pointing to great weather coming up for the U.S. harvest and early yields out the fields perhaps a bit better than expected. With little in the way of new oil exploration and a ton of capacity offline, perhaps the oil market is caught a bit offsides and we see an increase in ethanol demand. If production out of the fields here at home is better than forecast and upcoming South American weather seen as more cooperative prices could pull back a bit. Bears think total U.S. production could be a bit higher than the current USDA forecast. In the latest report, the USDA lowered its U.S. production estimate by -378 million bushels to 14.9 billion on a reduction in yield from 181.8 down to 178.5 bushels per acre. Remember, they also reduced harvested acres from 84 down to 83.5 million acres. Since August 28th, open interest has risen 128,000 lots and Dec futures added 19 cents. The trend for Dec corn is positive. Stable action over 380 will support a drive to 400. Closing under 361.75 cautions for a corrective phase.

Soybeans prices jumped +47 cents higher last week as funds increase their net long position to what is believed to be over +200,000 contracts. Bulls believe Chinese demand will remain strong and the U.S. balance sheet will continue to shrink into the yearend report. The USDA reduced their ending stock estimate by -112 million bushels in the last report as they reduced the average yield by -1.4 bushels per acre from 53.3 down to 51.9. Technically, this is the highest price we’ve seen in the front-end of the market since May 2018. In February 2018 we traded to $10.71 and in January of 2017, we traded to $10.80 per bushel. The highest front-end print in the past five years is $12.08^4 back in June 2016. Total open interest is at its highest level since April 2018. The trend for Nov beans is positive. Stable action over 1045 should fuel a run to 1100. Closing below 1008.5 alerts for a correction.

USDA’s Farm Service Agency (FSA) reminds farm owners that they have a one-time opportunity to update Price Loss Coverage (PLC) program yields for covered commodities on the farm. The deadline is Sept. 30, to update yields, which are used to calculate the PLC payments for 2020 through 2023. Additionally, producers who elected Agriculture Risk Coverage (ARC) should also consider updating their yields.

Sign-ups begin today for a new round of coronavirus aid to producers for as much as $14 billion, which the USDA detailed on Friday. The announcement came after President Donald Trump talked about the aid package at a campaign rally Thursday evening in Wisconsin. The president said his administration was providing an additional $13 billion to producers. The USDA announcement Friday was $1 billion higher than the president said at his rally. USDA said signup for the new Coronavirus Food Assistance Program (CFAP 2) would begin Sept. 21. Applications will be accepted through Dec. 11, 2020. The first CFAP package for coronavirus-related losses before April 15 has paid out $9.9 billion to 621,919 farmers, as of the latest payment update. Cattle, dairy, corn, hogs and soybeans are the main aid recipients. USDA had projected spending $16 billion for the CFAP.

The administrator of the U.S. Environmental Protection announced Friday a step on the road to re-registration of the herbicide atrazine. The announcement by Andrew Wheeler, that the agency has given interim approval to the re-registration of the triazine class of herbicides, is seen as good news for corn farmers. “The next option up if we couldn’t use atrazine is probably between $30 and $60 an acre more,” said Mike Moreland, president of the Missouri Corn Growers Association and a farmer in western Missouri, “And with today’s tight margins that would break a lot of farmers.” Wheeler, who made the announcement at a farm in southwest Missouri, tells Brownfield there’s another step before full approval is given for re-registration. “We still have the biological decision we have to make as far as the Endangered Species Act is concerned,” Wheeler told Brownfield following the announcement, “but at this point, we don’t see any problems with moving forward on atrazine.” (Source: Brownfield Ag)

 

Morning Commentary

Dec corn up 1 ½ at $3.70

Nov beans up 3 ¾ at $9.9975

The DOW is up

USD is weaker

Crude oil down $.39 at $36.94

Good morning,

Corn bulls are a little disappointed as the USDA only trims production by -378 million bushels, dropping yield from 181.8 down to 178.5 and harvested acres lowered from 84.023 down to 83.5. Bulls point to the fact “harvested acres” in Iowa were lowered by -1 million and Nebraska lowered by -350,000, both major producing states that could bring a much greater reduction in total U.S. production, which was lowered from 15.278 billion down to 14.900, but still stands well above last years 13.617 billion. Bears point to the fact the USDA still sees a very big crop and the fact overall demand was lowered by -100 million bushels despite the recent wave of Chinese buying. Net-net, bears argue U.S. ending stocks at 2.503 billion bushels is still comfortably above last years 2.228 billion and not a reason to add additional risk-premium to our current price.

Soybeans bulls are happy to see U.S. ending stocks lowered from 610 million down to 460 million. Perhaps most exciting to the bulls is the fact the USDA left demand “unchanged”, meaning the balance sheet could get trimmed more in the coming reports as both “crush” and “exports” look as if they could be bumped higher. The USDA lowered its U.S. yield estimate from 53.3 down to 51.9, but bulls believe that number could also end up working itself lower. The USDA also left “harvested acres” unchanged at 83.020 vs. 74.951 last year, again, bulls are thinking this number could ultimately be reduced, not raised higher. If we get ending stocks sub-400 million on lower harvested acres or perhaps a lower yield and demand stays strong we could have much higher prices as a “demand-driven” bull can get up and run. 

Over the weekend president Trump said that retail gas stations selling E-10 could now offer E-15 gasoline nationwide if their state government provides approval. Before we get overexcited we have to remember unleaded gasoline is actually  selling much cheaper than ethanol at the moment. Meaning it doesn’t really make a ton of financial sense. However, it is a step in the right direction and could provide a longer-term tailwind for ethanol. 

Brazil’s government will extend a tariff-free ethanol import program with the United States for 90 days starting Sept. 14, the foreign ministry said in a statement on Friday. During that time, the United States and Brazil will discuss ways in which they can open up their respective ethanol, soy, and corn markets, the statement said. Brazil allowed a non-tariff quota for imports of 750 million liters per year of ethanol to expire at the end of August, resulting in U.S. producers having to pay a 20% tariff. The next tariff-free regime will apply only to the first 187.5 million liters of ethanol, the Economy Ministry’s foreign trade body said in a separate statement on Friday.

 

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