Morning Commentary

Dec corn up 1 ¼ at $3.5375

Nov beans down 7 at $8.4325

The DOW is up

USD is stronger

Crude oil up $.44 at $70.76

Good morning,

Corn bulls are pointing to strong export sales and a nearby short-covering rally. Weekly corn export sales were reported at +1.3 MMTs, up sharply from last week and topped most all guesses There’s some talk the funds covered a few short positions based on the weakness in the U.S. dollar. Bulls are also pointing to some potential late inning complications in a few production areas across the U.S. Producers are reporting late disease complications as well as flooded fields in parts of the Dakota’s, Wisconsin and small portions of Iowa, Nebraska and Minnesota.

Soybean prices are down a bit this morning after yesterday’s big gains. Bulls argue that most all of the bearish news has now been baked into price and that a short covering rally was inevitable. We heard the recent rally was more currency related on the macro side, with some of the funds who had been short commodities based on a strengthening U.S. dollar, are now covering based on recent dollar weakness. There is also continuing talk that Argentine crushers are looking to buy more U.S. soybeans as their supplies are limited. Weekly U.S. export data was bullish and stronger than most in the market were anticipating.

The U.S. has bumped Brazil from the top spot of EU’s top soybean supplier since inking a deal in July with President Trump. In the 12 weeks to mid-September, U.S. soybeans accounted for 52% of imports to the EU, rising 133% compared with the same period last year to 1.47 million metric tons. European Commission Juncker pledged in a White House deal in late July that European would buy more U.S. soy as a part of a package to avert tariffs form Washington U.S. imports of EU cars. The key in understanding all of this is the fact that these trends are largely the result of favorable price movements in world markets. The EU had no previous barriers to U.S. soybeans. So it’s more likely that prices have enticed EU purchasers, not trade deals. (Source: Reuters)

For the second consecutive month, a Colorado based meat producer that ships nationwide is recalling thousands of pounds of ground beef for a possible E.coli contamination. The 132,000 pounds of ground beef products was made for the chuck portion of the cow. The recalled product bears the number “EST.86R” inside the USDA mark of inspection and were shipped to retail locations nationwide. This week’s recall comes less than a month after Cargill recalled more than 25,000 pounds of ground beef for an E. coli risk. (Source: USA Today)

Despite major market disruptions dominating the headlines and spurring negative price trends, buyers around the world continue to expand purchases of U.S. dried distiller’s grains with solubles, otherwise known as DDGS. By tonnage, exports of U.S. DDGS are up +2.2% year-over-year in 2017/18 to 10.5 million metric tons, with one month’s data yet to be released. While still down from peak exports of 12 million metric tons in 2013/14, the mix of world buyers purchasing U.S. DDGS represents a shifting dynamic in the market. China dominated the world DDGS market in 2013/14 importing 6.18 million metric tons. Since that time — when anti-dumping and countervailing duties were implemented — purchases have trended downward, dropping -78.4% in the current marketing year to nearly 157,000 tons. While the disruptions in the Chinese market sparked a vigorous response at all levels from traders, end-users, the U.S. government and the Council which has result in the rise of other market players who recognize the true feeding value of this feed ingredient. The diversification of world buyers for U.S. DDGS is directly attributable to the Council’s long-term market development work. Mexico is now the top buyer of U.S. DDGS, purchasing 1.95 million metric tons so far in 2017/18 — up another +3.2% year-over-year. Sales of DDGS nearly doubled to Turkey last marketing year, following the Council’s effort to connect end-user with U.S. farmers, grain suppliers and technology companies. While imports this marketing year are currently down 15%, Turkey remains the second largest buyer. South Korea rounds out the top three largest importers of U.S. DDGS for 2017/18h marketing year to date. Purchases of 1.06 million tons represent a +16.6% increase year-over-year and officially exceed the one million ton mark for the first time. Thailand currently ranks as the fourth largest buyer, with purchases of nearly 870,000 tons that already exceed last marketing year’s total. Similarly, sales to Indonesia are up +62% from the prior marketing year, continuing a steady trend of increased imports over the last three years. The U.S. Grains Council continues to stress that whether just south of the U.S. border or across the Pacific Ocean, one trend in the U.S. DDGS remains true – “When Trade Works, the World Wins.” (Source: USDA, USGC)


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