Morning Commentary

Dec corn down 3 ¾ at $3.705

Nov beans down 9 ¾ at $8.76

The DOW is down

USD is stronger

Crude oil down $1.01 at $68.74

Good morning,

Corn bulls are hoping they will soon see continued gains. Technically, the market seems as if it has stalled out just ahead of heavier nearby resistance up between $3.80 and $3.90 per bushel. Bulls argue that extremely wet fields and significant delays in the harvest, certainly places the crop in greater risk of yield drag associated with stalk diseases, rot, lodging, breakage, ear and root complications, etc. The further the harvest drags on, the more yield loss potential is left in the field. Lets also keep in mind, generally after October 15th, the soil in the fields will take much longer to dry out.

Soybean traders continue to debate strong harvest delays in portions of the U.S. Nearby weather forecasts are showing a window of opportunity to get the beans out of the fields, but for areas that have seen massive amounts of rainfall, there’s some question if things will dry out enough before the next wave of moisture arrives?

Fertilizer consumption in Brazil is expected to grow by +2.8% in 2018, to a record of just over 35 million tonnes, with demand from soy producers, in particular, offsetting rising freight costs and the impact of the strike of truckers, projected consultancy FCStone. The estimate comes one day after the National Association for Fertilizer Diffusion (Anda) shows that fertilizer deliveries in the accumulated 2018 through September were more than 4% higher compared to the same period of the previous year. The high expected by FCStone reverses a forecast of fall of 3.7% made by the consultancy itself in July, shortly after the entry into force of the minimum price table for freight, one of the measures taken by the government to end the stoppage of truck drivers May. (Source: Reuters Global)

A coalition of consumer advocates and environmental groups want hamburger chains to crack down on excessive use of antibiotics among certain beef suppliers. The report graded the 25 biggest hamburger chains on their antibiotic use, only two chains had an “A” grade. This report is being taken quite seriously and being passed all around mass media. (Source: Politico)

 

Morning Commentary

Dec corn down 1 ¼ at $3.74

Nov beans down 1 ¾ at $8.83

The DOW is down

USD is stronger

Crude oil down $.58 at $71.34

Good morning,

Corn traders continue to debate U.S. yield and how much if any reductions the USDA will be making based on harvest weather hiccups? Bears think the yield will remain slightly above 180 bushels per acre, bulls believe we ultimately end up just shy of 180 bushel per acre. Weather in South America remains cooperative and most sources are looking for a sizable jump in total corn production. Early talk coming out of Brazil is for a crop north of +95 MMT, which would be significantly higher than last years 82 MMTs. Keep in mind, during the 2016-17 crop year Brazil harvested a 98.5 MMT corn crop, so there’s clearly room for massive improvement compared to last year. As for Argentina, most all sources are showing early forecasts north of +40 MMTs, which is also significantly higher than the 32 MMTs they harvested last year. In other words, if weather cooperates, the global balance sheet could be chewing on an additional +20 to +25 MMTs of South American corn.

Soybean bears are pointing to a dryer and warmer U.S. forecast for the second half of October. Bulls are pointing to harvest complications for a large portion of the Western belt. Most concerning perhaps is the fact our top-producing state of Iowa is reported it’s slowest ever pace for harvesting the crop. The USDA estimated the total U.S. harvest as being the slowest in nine-years. The question now being debated is how much yield loss or drag will be seen as the crop sits delayed in the field?

A New Jersey-based company, Zoetis, will have sole rights to market a first-of-its-kind vaccine for the deadly African swine fever a disease threatening pork production in China and Eastern Europe. (Source: FeedStuffs)

The National Cattlemen’s Beef Association an other are petitioning the Department of Transportation to increase the amount of time for which truckers can drive. Current federal regulations limit truckers to 11 hours of driving time and 14 hours of total 0n-duty time. The ag groups want to see the drive time increase to 15 hours per day and total on-duty time to 16 hours daily, following 10 consecutive hours off. They hope this will help drivers make deliveries on time.

 

Morning Commentary

Dec corn down 2 ¾ at $3.755

Nov beans down 8 at $8.835

The DOW is up

USD is weaker

Crude oil down $.47 at $71.31

Good morning,

Corn traders continue to debate longer-term supply and demand. Bulls are pointing to a slow U.S. harvest and thoughts the USDA could continue to backpedal in regard to their current 180.7 bushel yield forecast. Bears are pointing to better U.S. harvest weather in the forecast, cooperative weather in South American and Ukraine, and continued talk of more U.S. corn acres being planted next season. The USDA left weekly corn conditions “unchanged” at 68% rated GD/EX. States that showed deteriorating conditions were: Colorado -5%, Tennessee -4%, Minnesota, North Dakota, and Wisconsin -2%, Iowa and Ohio -1%. The technical trend is positive.   The market is poised for a near term test of channel resistance at 382 today.  A close under 362.25 warns of a setback.  System types are long risking 366.25.  In liquidation mode, I think trend followers would pause on a close below 362.25.  Given the fund short and modest bounce in wheat-corn over the past three days, corn is likely to be resilient today.  Money flow notwithstanding, the low 380 area may provide a nice selling opportunity.  From a timing standpoint, Oct 17th is a potential turning point.

Soybean bulls are talking about a few cargoes of old-crop U.S. beans loading and moving to China and the pace of harvest in big production states like Iowa and Minnesota falling to over -30% behind their historical pace. Bulls hope these fresh new headlines can help hold and build on the recent gains. Prices are up around +80 cents from the most recent lows. The USDA showed crop-conditons here in the U.S. deteriorating from 68% down to 66% rated GD/EX. Despite the recent reduction, this is still much better than last years 61% rated GD/EX. States showing weekly deterioration were: Iowa, Kansas and Ohio -5%, Missouri and Tennessee -4%, Arkansas -3%, Kentucky, Minnesota, Nebraska, and South Dakota -2%, Indiana and Wisconsin -1%. Technically, the short term trend is bullish. Look for a test of the low 900-area.  Closing under 861.5 warns of a setback.  System types are long risking 855.  I thought trend followers were risking 906.5; apparently it was 870.  The market is poised for an early correction.  However, with today marking the cutoff for Friday’s COT report, the bean market is vulnerable to further speculative buying.  Money flow notwithstanding, the low 900 area may provide a nice selling opportunity.  From a timing standpoint, Oct 17th is a potential turning point.

The Andersons, Inc. announced yesterday that it has entered into a merger agreement with Lansing Trade Group, LLC, its long-time affiliate, to acquire the 67.5% of Lansing equity that it does not already own for cash and stock currently valued at a total of approximately $305 million. (Source: PR Newswire)

September saw soybean crushings hit 160.779 million bushels which easily surpassed the previous September record by 3.373 million bushels. keep in mind, this is the 11th month in a row where crus hit monthly records. The trade was expecting numbers below August’s 158 plus million bushels.

In a letter to the White House, the U.S. meat industry and its emerging competitors in the field of lab-grown meat struck a truce. They said FDA and USDA should jointly regulate the new product that they agreed to call “cell-based meat and poultry.” The proposal would avert a potentially nasty fight among agencies over regulation of the products, including the question whether they can be sold as meat. (Source: FERN)

China over the weekend reported a new African Swine Fever case on a farm with nearly 20,000 pigs, the largest farm yet to report the highly contagious disease in the world’s top pork producer. The new case underlines the escalating threat to the country’s $1 trillion pig industry. The fact that the disease was confirmed on a significantly larger pig farm has some much more concerned. Keep in mind, China has the largest pig herd in the world with an estimated 500-700 million pigs. (Source: Reuters)

 

Morning Commentary

Dec corn down ¾ at $3.73

Nov beans down ¼ at $8.6725

The DOW is up

USD is weaker

Crude oil up $.48 at $71.82

Good morning,

Corn bulls are happy to see a stronger technical picture on the charts. The close in the DEC18 contract back above $3.70 per bushel was its first since August 21. The trade is eager to see if the momentum can continue as we approach much stronger resistance between $3.80 and $3.90 per bushel. Keep in mind, the market hasn’t been able to close back above $3.90 since early-June.  Technically, the trend is positive.   Momentum is strong.  The market is poised for a near term test of channel resistance (379.5 today).  A close under 361.75 warns of a setback.  System types are long risking 360.25.  Their smallest since Aug 21st, trend funds were short 81,000 corn on  a futures and options basis as of Oct 9th versus 95,000 the week prior.  In liquidation mode, I think trend followers would pause on a close below 361.75.

Soybean prices remain in a fairly narrow range despite harvest uncertainty with a portion of the U.S. crop. During the past few weeks, the NOV18 contract has oscillated between $8.40 and $8.75 per bushel. Despite last weeks late rally, we actually lost a couple of cents on the week. The U.S. balance sheet got a bit larger as some adjustments were made to last years numbers. The new-crop yield estimate was bumped higher to another all-time record at 53.1 bushels per acre, but total acres were lowered a touch to offset the yield gains. Net-net no real surprises to the U.S. balance sheet, just extremely burdensome at 885 million bushels. Global stocks are also at record levels. The short term technical trend is positive.  Having corrected it’s overbought condition, momentum is trying to turn up. A close over 872.5 should prompt a run to 890.  Closing under 849.25 warns of a setback.  System types are long risking 848.  Trend funds were short 102,000 beans on a futures and options basis as of Oct 9th versus 100,000 a week prior.  I think trend followers are risking 906.5.

South Korean buyers have turned to Pakistani ENA and REN industrial ethanol grades for late December to January delivery, as prices have dipped below those from Brazil following a rally in Brazilian ethanol prices. Offers of Pakistan ENA grade ethanol for November-December loading had fallen to $630/mt FOB Karachi. (Source: Platts)

 

Morning Commentary

Dec corn unchanged at $3.6925

Nov beans up 4 ¾ at $8.63

The DOW is up

USD is stronger

Crude oil up $.82 at $71.79

Good morning,

Corn bulls are happy to see prices at their highest levels since mid to late-August. Producers should be keeping a close eye on the DEC19 contract as it’s now back above $4.00 per bushel. The USDA delivered a slightly bullish surprise, by lowering their production estimate by -49 million bushels from 14.827 down to 14.778 billion. The USDA reduced their U.S. average yield estimate by -0.6 bushels per acre to 180.7. If you look deeper inside the numbers, you can see the USDA slightly trimmed the number of ears per acre, but they’re still record-large. At the same time, they slightly raised their implied ear weight, which is also record-high. Beginning stocks were raised by +138 million bushels. Feed and Residual was lowered by -25 million bushels. Exports were raised higher by +75 million bushels. Net-net, total ending stocks were bumped higher by +39 million bushels, but less than the trade was anticipating. Global corn stocks were also raised slightly higher from 157.03 to 159.35 MMTs.

Soybean bulls avoid a bearish bullet, as the USDA offsets a higher yield estimate of 53.1 bushels per acre, with a -514,000 reduction in harvested acres. Increases for North Dakota, Nebraska, and Iowa were more than offset by reductions in many other states. Interestingly, the USDA is now showing the number of pods per acre at 1,900, a fresh new record. Beginning stocks were raised higher by +43 million bushels. Demand was left “unchanged”. Global soybean ending stocks were raised higher from 108.26 to 110.04 MMTs. Global soybean output is projected at a record 369.5 million tons, up 0.2 million with higher production for Canada partly offset by lower projections for India, Mexico and the U.S..

Brazilian farmers are expected to harvest up to 238.54 million tonnes of grain in the 2018/19 season, the government said on Thursday, with the South American country potentially breaking its production record thanks to expected corn and soy bumper crops. In the prior season, Brazilian farmers harvested some 227.91 million tonnes of grains like soybeans and corn, said Conab, the government food supply and statistics agency. Much of the gain is expected to be in corn, with output expected to rise as much as 12.75 percent to 91.08 million tonnes, Conab said in its first forecast for the 2018/19 season, which kicked off in September. (Source: Reuters)

U.S. beef producers exported more than $750 million in August, an all-time high, according to USDA data compiled by the U.S. Meat Export Federation. The total is a 11% year-over-year increase from August 2017.

 

Morning Commentary

Dec corn down 1 ¾ at $3.61

Nov beans down 3 ¾ at $8.485

The DOW is down

USD is weaker

Crude oil down $.95 at $72.22

Good morning,

Corn traders have all eyes on today’s USDA report. Average trade guesses have been painting a bearish outcome, with most looking for a slight bump higher in the U.S. yield from 181.3 to perhaps 181.8 bushels per acre. Despite the recently reported harvest complications and late-inning battles with disease, several inside sources are thinking the yield could ultimately push up closer to 183 bushels per acre.  In the end, this could push U.S. ending stocks north of +1.9 million bushels vs the USDA’s previous estimate of 1.77 million bushels. Another question is how the USDA plays their demand estimates, particularly “exports” and “feed and residual”? there are certainly some arguments that can be made for a higher export estimate. Despite the large livestock numbers and animals on feed, many inside the trade are looking for a sizable reduction in the USDA’s “feed and residual” estimate. Bottom-line, Bears are looking at ample U.S. supplies and the crops in South America are off to a fairly good start. Bears also pointing to forecasts for slowing global growth, a strong dollar, and ongoing trade tensions with the Chinese.

The amount of U.S. corn inspected for export in the week ended Oct. 4 totaled 1.351 million metric tons, up 132% form the 582,248 metric tons inspected the year-ago this week. IN the first 34 days of the 2018/19 marketing year, the amount of U.S. corn inspected for export totaled 5.806 million metric tons, 62.1% higher than in the same period in the previous marketing year. The largest share of U.S. grain exports last week was corn at 56.2% of the total grains inspected. Soybeans were second at 23.7%. (Source: Platts)

Soybean bears are hoping the USDA delivers on thoughts of a more burdensome balance sheet. Most inside the trade are anticipating another bearish adjustment to the soybean numbers. There’s a strong chance the new-crop ending stock estimate could push north of +900 million bushels. Thoughts are the USDA will increase old-crop ending stocks, while at the same time perhaps increasing their current new-crop yield estimate from 52.8 to over 53 bushels per acre. There’s some debate about “demand”, but most doubt there are many major changes coming to the numbers. Bottom-line, most are looking for a +40 to +80 million bushel increase in U.S. supply. World Ending stocks seem to be much more of a wild-card. In fact, there’s a chance the USDA’s domestic numbers could be bearish, but global numbers a bit more bullish than the trade is anticipating.

Excessive rains across the Midwest over the past week have slowed harvests and closed at least three locks on the upper Mississippi River, a key artery for shipping Midwest grain to U.s. Gulf exporters. They are talking about at least a two week period where nothing is going on from St. Louis to Davenport IA. On the Mississippi River, three locks between Davenport, Iowa, and Quincy, Illinois – locks 16, 17 and 20 – were already closed as of Tuesday due to high water. (Source: Reuters)

Brazil is on track to export a record $100 billion worth of agricultural products this year as demand for staple commodities like beef and soybeans from the South American country remain strong, the government said on Wednesday. The amount represents a 4.2 percent rise from last year and is slightly higher than the previous record of $99.97 billion in 2013, government trade balance data show. (Source: Reuters)

The USDA’s $12 billion trade aid package could end up shrinking after an agreement to update NAFTA was struck according to Ag Secretary Sonny Perdue. In an interview, Perdue said they will be recalculating the financial aid, depending on which tariffs come off. (Source: Reuters)

 

Morning Commentary

Dec corn up ¼ at $3.6675

Nov beans down 3 ¼ at $8.665

The DOW is down

USD is stronger

Crude oil up $.42 at $74.71

Good morning,

Very short comments today since there is not much to say other than it is raining again.

The short term technical trend for December corn is positive.  Target 375.5-380.  The market is overbought, momentum is turning lower and approaching a sell signal.  Setbacks that hold trend line support (today at 366) on a closing basis promotes rallies.  A close under 359 warns of a pullback.  System types are long with sell stops around 359.

The short term technical trend for Nov beans is positive.  The target is 870-880.  Holding former trendline resistance (857.25 today) helps support rallies.  The market is overbought.  A close under 848 warns of a setback.  System traders are long risking 851.5.

 

Morning Commentary

Dec corn down 2 at $3.6625

Nov beans down 1 at $8.68

The DOW is down

USD is stronger

Crude oil down $.80 a $73.54

Good morning,

Corn prices have climbed to multi-week highs on thoughts of improved trade negotiations, late U.S. harvest weather complications, and continued strong demand. Washington has inked deals with both Mexico and Canada, now there are rumors that U.S. leaders are considering a ‘Trade Coalition’ with Japan and the European Union to confront China. Rains have been heavy in many parts of the U.S., with several areas still having corn in the fields. The rains will continue through mid-week adding big complications in parts of the Plains and northwestern Midwest. There’s also talk of heavy snow by mid-week in parts of North Dakota. The longer term 2-to-4 week forecast shows things turning warmer and drier, but between now and then the market could become more concerned. The short term technical trend for December corn is positive.  Target 375.5-380.  The market is overbought, momentum is turning lower and approaching a sell signal.  Setbacks that hold trend line support (today at 362.5) promotes rallies.  A close under 359 warns of a pullback.  System types are long with sell stops around 362.5.

The downturn in U.S. ethanol exports to Brazil, while somewhat expected, was another blow to biofuel producers reeling from low prices and near-record large stockpiles. I’m told only 4,395 gallons, or about 105 barrels of U.S. ethanol were exported to Brazil in August, down sharply from 24.5 million gallons, whic is about 583,400 barrels in the same month a year ago. The monthly imports were the smallest since Brazil brought in no U.S. supplies in October of 2015, USDA data showed.

Soybean bulls have been able to add about +60 cents to the lows set back in September. Heavy rains and extreme delays in the harvest are now adding to the recent gains. Some important production areas are now battling flooded fields and increasing complications. There’s talk that parts of central North Dakota could see some fairly heavy snow by mid-week. Last week, the USDA elected to leave their weekly crop-conditions “unchanged” at 68%: Illinois showed a whopping 80% of their crop in “Good-to-Excellent” condition; Iowa showed 74% rated GD/EX; Nebraska 85% rated GD/EX; and Minnesota 72% rated GD/EX. It will be interesting to see if those ratings get hit in this afternoons report. The trade will also be eager to see the USDA’s “harvest” estimate. Last week, the USDA estimated 23% of the U.S. crop had been “harvested” vs. the 5-year average of 20%. It seems like we’ve been averaging around 60% of the U.S. soybean crop harvested by October 15th. The short term technical trend for Nov beans is positive.  The target is 870-880.  Holding former trendline resistance (857.5 today) helps support rallies.  The market is overbought, momentum is turning lower, and approaching a sell signal.  A close under 848 warns of a setback.  System traders are long risking 851.5.

Pickup trucks are getting larger and more expensive. Because gas is cheap, pickups are in demand, which boosts pickup prices. Edmunds’ data shows, through September, the average transaction price for a full-size pickup is $48,377, a 48-percent boost from 10 years ago and a 19-percent hike from 2013 for the same period. A 48% increase in price is the highest price increase for that time period out of all vehicle categories. Part of that rise in price comes from the fact that more and more people are using their trucks as family haulers, rather than strict work vehicles. When you start doing that, you’ll also start looking for more luxury features. (Source: Edmunds)

 

Morning Commentary

Dec corn up ¾ at $3.6825

Nov beans up 2 ¼ at $8.615

The DOW is down

USD is stronger

Crude oil up $.17 at $74.50

Good morning,

Corn bulls are talking about improved trade relations and steps in the right direction with Japan and the European Union. Bulls are also talking about significant harvest delays and heavy rains here in the U.S. complicating issues in many parts of the upper and western-Midwest. Bulls are also talking about continued strong export demand numbers and lower global supply than the past couple of years. On the supply side, Informa bumped their U.S. crop estimate higher to 14.890 billion bushels on an average yield of 182.1 bushels per acre. The USDA is currently forecasting the U.S. crop will total 14.827 on an average record yield of 181.3 bushels per acre. Next week will be interesting, as President Trump travels to Iowa to perhaps announcing full-year E15 on Tuesday, then on Thursday, the USDA releases their October supply and demand report, which is still a bit of a wild-card. Many inside the trade believe the USDA is going to again bump their yield estimate higher and make some slight adjustments to demand.

Soybean prices are at about the same level as last Friday. There’s really nothing fresh or new in regard to Chinese trade headlines or South American weather, hence no significant movement in soybean prices. Bears argue there is definitely another round of negative headlines in the hopper surrounding U.S. and Chinese trade relations. The question is will President Trump ruffle feathers and raise the stakes with the Chinese as we are now within 30-days of the U.S. mid-term elections? Bulls believe we might be in a bit of a “safe-zone” this close to the election, hence negative trade headlines might not appear, allowing for some free swings to the upside. The problem is there’s still a USDA report due out next Thursday which could deliver another fundamental nail in the coffin. There’s talk the yield could work itself higher and overall demand might take a small step backwards, which ultimately works to make the balance sheet more burdensome. The big question remains, will the Chinese be able to ration supplies long enough to go without U.S. soybeans? Producers in Brazil got the crop in the ground early and most areas are off to a good start, meaning some soybeans could theoretically be available to export to China by late-December or at least by early-January. Is China bluffing by saying they can ration and make do without 8 to 10 MMTs of missing demand? This is certainly high stakes poker at it’s finest.

Ag Secretary Sonny Perdue told a crowd in Washington DC yesterday that the United States “probably made a mistake” becoming too trade dependent on China and added that the administration was pursuing trade deals elsewhere. Perdue reminded the gathering that there’s a hungry world out there besides Canada, besides, China, and that the U.S. would be pursuing new agreements with the European Union, Japan and India, among others.

An Arizona company is recalling 6.5 million pounds of various beef products because they may be contaminated with salmonella, the USDA announced Thursday. The products, identified as being supplied from JBS Tolleson of Tolleson, Ariz., are raw, “non-intact” beef items including ground beef that was shipped nationwide. I’m told at least 57 people in 16 states have reported getting sick. The USDA said the meat was packaged between July 26 and Sept. 7. They have an establishment number “EST. 267” inside the USDA mark of inspection. (Source: USAToday)

 

Morning Commentary

Dec corn up 2 at $3.6675

Nov beans up 3 ¼ at $8.6475

The DOW is down

USD is stronger

Crude oil down $.47 at $75.94

Good morning,

Corn prices continue to trade in a fairly narrow range, but have rebounded almost +30 cents from the lows posted back in September. Karen Braun with Reuters, has been circulating some interesting corn balance sheet numbers and graphics as of late. Ending stocks for 2018-19 are currently forecast at 1.774 billion bushels; 2017/18 ending stocks were at 2.140 billion bushels; 2016/17 ending stocks were at 2.293 billion bushels. Bears argue there’s a chance we could eventually push back above 2.0 billion bushels. Bulls are hoping we will hear some type of formal announcement next week by President Trump when he visits Council Bluffs, Iowa on Tuesday, October 9th. The word circulating is that President Trump is directing the Environmental Protection Agency (EPA) to lift the summer ban on E15 gasoline and perhaps tightening restrictions on the trading of ethanol blending credits to keep prices down for merchant refiners struggling with the cost of complying with the U.S. Renewable Fuel Standard (RFS). The short term trend for December corn is bullish albeit overbought and divergent. Target 375.5, perhaps 380. Closing below 358.75 alerts for a pullback. Long Dec corn, system traders will find sell stops around 358.25.

Soybean bulls are pointing to continued delays in the U.S. harvest. Thoughts are, heavy rains and flooding could bring increased delays in several key production areas. Depending on location, if the harvest gets pushed back far enough, colder temps could become a bigger concern and headline. Bears continue to point towards a massively burdensome balance sheet and in all likelihood another fresh all-time record U.S. crop. Bears also continue to wonder about overall U.S. export demand. Not only do we have a large number of “unshipped” bushels sitting on the books, but new U.S. sales are also lagging and there’s really no sign of a nearby compromise with the Chinese. The technical trend for Nov is bullish and the market is deeply overbought. Stable action above former trend line resistance around 860 will support rallies. The technical target is 880. Closing under 848 warns of a pullback. Long November beans, system types will find sell stops below 842.

The most recent trade aid data from USDA show the department has handed out $53 million in direct payments to farmers of tariff-hit products, with an estimated $78 million on the way. That’s out of an initial $4.7 billion batch of direct aid that USDA is offering corn, soybean, wheat, sorghum, cotton, pork and dairy farmers — plus growers of sweet cherries and almonds. The bulk of the initial aid has so far gone to farmers in Iowa, Kansas, Illinois, Indiana, and Wisconsin. Nearly 60,000 producers have applied for payments since the program opened on September 4. (Source: USDA)

According to USDA, #China’s harvested #corn area surpassed USA’s in 2013. Over the last few years, China has been planting btwn 95-100 million acres each year. Together, USA and China have consistently accounted for ~38% of total corn area harvested in the world. Source: Karen Braun @kannbwx

 

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