News

Morning Commentary

Dec corn down 1 ¼ at $3.965

Nov beans down 5 at $9.31

The DOW is down

USD is stronger

Crude oil down $1.15 at $53.55

Good morning,

Corn & Soybean  traders are trying to sort out the “weather wild-cards” and “Washington wild-cards” that have recently been flipped over. The combination of cold temperatures to the North and late-maturing crops are creating wide-ranging guesses about yield drag and overall “quality”. Bulls continue to believe the U.S. corn yield will end up sub-165 bushels per acre despite the USDA’s recent adjustment higher to 168.4 bushels per acre. Bulls also see “export demand” for both U.S. corn and soybeans now perhaps being underestimated, especially if the recent trade talks with China and Japan actually turn into the buying that’s being talked about in the headlines. President Trump said the U.S. would call off planned tariff increases on Chinese goods next week while China would buy $40 billion to $50 billion worth of U.S. agricultural products. As a reference, pre-trade dispute (in 2017), China was purchasing less than $30 billion in U.S. agricultural products, hence this would be a sizeable jump in demand if it comes to fruition. Keep in mind, there have also been talks of a sizeable jump in demand from the Japanese. Remember, Japan recently agreed to lower or reduce tariffs on over $7 billion of U.S. grown farming products, including beef and pork. The big question now is how and when does everything unfold? With the USDA just recently lowering last year’s production numbers, there’s some concern in the air they may not have the data available and all of the necessary analysis completed for many more months. Harvested acres and weights could certainly be very tricky in calculating this year, so timing becomes a big concern for the bulls. We also have to wonder when the new trade deals will actually start to have an impact on demand?  The Chinese trade deal will happen over time in three stages, with more divisive issues to be addressed later. President Trump said he and Chinese President Xi Jinping could meet and sign the first phase of a deal in mid-November, at the Asia-Pacific Economic Cooperation summit in Chile and it would be difficult to imagine the U.S. escalating tariffs thereafter if an agreement is reached. The trend for November beans is positive. The market achieved our 944 target overnight. Stable action over 944 is needed to drive the next leg higher. Closing under 916.75 alerts for a return to corrective action. The trend for December corn is neutral positive.  Closing under 379.5 alerts for a return to defensive trade and a test of key support at 369. Stable action above 398.25 is needed to restart a bull drive.

The Illinois Department of Agriculture is submitting additional dicamba regulations to the EPA for 2020. Illinois Ag Director John Sullivan tells Brownfield there are two big changes on the state label, including a cut-off date 25 days earlier than the 2019 extended cut-off. “The cut-off date to apply it will be June 20th, 2020. We’ve also added a temperature trigger, so if the air temperature of the time of application is over 85 degrees Fahrenheit, application will not be allowed.” He says the temperature cut-off also applies if the local forecast for the date of application is above 85 degrees. Sullivan says they are making this announcement early so farmers have time to plan for spring management programs. He says the additions are in response to the rapid increase of dicamba related pesticide misuse complaints over the last three years. “In 2017 we saw complaints in the 300 range. In 2018, it jumped up to 500 and this year it was over 900 and that is simply not acceptable.” The additions will be sent to the US EPA for review. Applicators will be required to follow the federal and updated state dicamba labels. (Source: Brownfield Ag.)

Thousands Urge USDA to Act on GIPSA Rule: In May, the U.S. Department of Agriculture announced its intent to publish a new rule under the Packers & Stockyards Act (PSA), also known as the GIPSA rule. The rule would specify criteria the secretary of agriculture could consider in determining whether conduct or action by packers, swine contractors or live poultry dealers constitutes an undue or unreasonable preference or advantage and a violation of the PSA. Rural Advancement Foundation International-USA (RAFI-USA), the National Sustainable Agriculture Coalition (NSAC), the Government Accountability Project (GAP), the Organization for Competitive Markets (OCM) and Farm Aid have joined farmers Tony and Christy Grigsby in the fight for farmer protections and have, together, gathered signatures from more than 84,000 supporters demanding that USDA take strong action in its upcoming undue preference rule-making. Tony and Christy Grigsby were contract poultry farmers for more than 10 years in Alabama but say the “exploitative system of contract poultry farming” financially ruined them.

Beef Checkoff Money was Diverted to Lobby Group: Newly released documents in a lawsuit between a group of independent Montana cattle ranchers and the USDA show that millions of dollars from an industry marketing fund are being diverted to the top cattle lobby, which some ranchers have long claimed misappropriates those funds for political use. By law, the money ranchers pay into the checkoff fund is to be used to advertise beef both nationally and internationally. The court documents reveal that the state councils that collect the beef checkoff funds from ranchers pass on huge sums to the National Cattlemen’s Beef Association (NCBA), the beef industry’s trade and lobby group, and its affiliates. It is illegal for the NCBA to use that money for political purposes, including lobbying. The NCBA insists that checkoff money is not used for political activities or lobbying. Ranchers point to cases in which checkoff funds have been misused or the firewall between promotional and political activities has appeared porous. The lawsuit now extends to 14 states beyond Montana — Hawaii, Indiana, Kansas, Maryland, Nebraska, Nevada, New York, North Carolina, Pennsylvania, South Carolina, South Dakota, Texas, Vermont, and Wisconsin — whose state beef councils are, according to the ranchers, also private entities.

 

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