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Market Commentary

March corn up ¼ at $3.655

March beans up 1 ¾ at $9.8475

The DOW is up

USD is weaker

Crude oil down $.15 at $61.64

Good morning,

Van Trump says “Corn bulls seem to be looking for a slight reduction in global and domestic ending stocks from the USDA today. The two driving forces appear to be improved global demand (more global interest in producing ethanol) and a reduction in South American production. I think most everyone is in agreement that the current Argentine production estimate at 42 MMTs is a bit too optimistic based on the recent weather conditions. I suspect the USDA could cut to 40 MMTs. There’s also some questions surrounding the Brazilian production estimate. I personally think the USDA opts to leave that estimate “unchanged” to slightly lower, even though I believe it ultimately moves significantly lower in the weeks ahead. As a producer, I will be looking for any sizable rally as an opportunity to reduce a bit more risk. My personal goal is to have 40% of my new-crop price risk removed prior to planting.”

China National Grain and Oil Information Center reported that Chinese production fell for the second straight year on a pullback in planted acres. Both animal feed and industrial use has contributed to an increase in domestic Chinese demand. Essentially, this is the second year in a row where Chinese corn production has pulled back and demand has pushed higher. Hopefully this means China will start chewing into their massive surplus. Remember, most estimate the Chinese are holding just under half of all global surplus.

Soybean traders will be keeping a close eye on updated USDA data and the extended Argentine forecast. Most inside the trade are looking for the USDA to bump U.S ending stocks higher, meaning closer to 500 million bushels. Thoughts are we will see a -15 to -30 million bushel reduction in exports and a slight bump higher in domestic crush. As for South America, the weather forecast seems little changed, as traders continue to pay close attention to Argentina and parts of Brazil. There were reports circulating inside the trade yesterday that suggest 50% to 60% of Argentina’s soybean crop is battling some type of dryness.

Republican lawmakers have agreed to advance a limited extension of a lapsed $1-per-gallon biodiesel tax credit as part of a government spending bill, said people familiar with the deal who asked not to be named because final details of legislation are still being negotiated. Under agreement, extension would apply only to 2017 and the tax credit’s structure would not change. Senate supporters had pushed for extension through 2018 and advocated restructuring the tax incentive so it could be claimed by producers instead of blenders. (Source: Bloomberg First Word)

Brazilian ethanol imports surged in January with 164.6 million liters entering the country, almost twice as much as in December, Secretariat of Foreign Trade data showed Wednesday. The increase in January imports was anticipated, given the plunge in US ethanol prices to their lowest levels since 2005 and higher Brazilian domestic prices in Brazil as the Center-South entered its intercrop season. This allowed the arbitrage window to open despite Brazil’s recently imposed tariff of 20% on quarterly volumes greater than 150 million liters. According to Platts ethanol price assessments delivered in Suape, the import arbitrage appears open — even with the 20% tariff — since early December. (Source: Platts)

USDA Secretary Sonny Perdue told House Agriculture in a meeting this week that he “would welcome” being given greater authority to deny state requests to temporarily waive time restrictions on food stamp benefits for able-bodied adults without dependents. Perdue added that this SNAP issue could be addressed in the next farm bill, which must be reauthorized by Sept. 30. (Source: Politico)

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