Morning Commentary

Dec corn down 1 ¾ at $3.64

Nov beans down ¼ at $8.755

The DOW is down

USD is stronger

Crude oil up $.06 at $75.36

Good morning,

The current U.S. average being reported by AAA is about $3.88 per gallon, diesel is running about $3.21 per gallon, E85 averaging about $2.44 per gallon. These prices are all up about +5 cents per gallon compared to last month. Compared to last year at this time, unleaded and E85 are up about +32 cents per gallon, diesel is up about +50 cents per gallon.

Corn bulls are talking about extreme weather worries handcuffing the U.S. harvest. Heavy rains in the forecast for areas that have already been deemed too wet, have some inside the trade thinking prices are currently too cheap and a bit of weather risk-premium needs to be added.  The USDA reported weekly crop-conditions “unchanged” at 69% rated “Good-to-Excellent” vs. 63% last year at this juncture. The USDA continues to show the U.S. crop running ahead of schedule. Corn categorized as “mature” is now estimated at 86% vs. the 5-year average of 71%. Corn “harvested” is estimated to be 26% vs. 16% last week vs. the 5-year average of 17% by this date. Tennessee and Pennsylvania are currently the only states running behind their historical harvest pace. Big production states are all running well ahead of schedule. Keep in mind, Illinois corn is currently rated 80% “Good-to-Excellent”; Nebraska 83% GD/EX; Minnesota 78% GD/EX; and Iowa rated 75% GD/EX, of which Iowa, Illinois and Nebraska conditions all showed improvements last week. Minnesota was “unchanged”.

INTL FCStone is now estimating the 2018 U.S. corn crop at 14.940 billion bushels vs. their September estimate of 14.532 billion. This estimate is +113 million bushels more than the current USDA forecast. FCStone is forecasting the U.S. average yield at 182.7 bushels per acre vs. the USDA’s current yield estimate of 181.3 bushels. FCStone is forecasting the U.S. soybean crop at 4.796 billion bushels on an average yield of 54 bushels per acre. The total crop is just slightly higher than the current USDA estimate.

Soybean bulls are happy to see a deal inked with Canada. Thoughts are it frees up more time and effort to find a compromise with the Chinese. The USDA left weekly crop-conditions “unchanged” at 68% vs. 60% last year at this stage. The crop remains ahead of pace, with the USDA reporting 83% “dropping leaves” vs. 75% last year. The crop is now 23% harvested vs. 14% last week vs. the 5-year average of 20% on this date. Arkansas, Kentucky, Louisiana, Mississippi, and Ohio are the states currently running behind schedule. Illinois harvested 18% of their crop last week and is still showing 80% of their crop in “Good-to-Excellent” condition; Iowa is showing 74% rated GD/EX; Nebraska 85% rated GD/EX; and Minnesota 72% rated GD/EX. Weather and Washington remain the driving force…

Russia’s pork industry is being hampered by African Swine Fever (ASF) as outbreaks of the virus are preventing producers from exporting more to lucrative Asian markets and leaving them with falling prices at home, industry experts say. Russia first reported ASF in 2007 and has registered more than 1,300 cases since then as the highly contagious hemorrhagic disease of pigs has spread from the southern Caucasus region to the country’s northwest region and Siberia in the east. (Source: Reuters)

The volume of ethanol blended with gasoline has reached an all-time high in India, but continues to lag goals, the US Department of Agriculture said Monday. I’m told ethanol consumption for fuel use is poised to reach 1.25 billion liters in 2018, thanks to the governments allowance of a new feed stock, the highest volume on record, according to the USDA’s annual report on biofuels in India. From what I understand, blend rates could spike as high as 3.2% but will fall well short of the governmental targets at 10%.

The concept of reducing livestock emissions by using seaweed as feed is the subject of ongoing scientific research, and early results are promising. University of California researchers have found that cows that eat seaweed appear to emit less methane . But one of the big challenges to implementing the seaweed solution is getting enough of the stuff to farmers, and the kind of seaweed that has shown results in cows isn’t commercially farmed. Enter Australis Aquaculture of Greenfield, Massachusetts, which is in the midst of research at facilities in Vietnam and Portugal that is part of its push to become the first farm to produce the seaweed at commercial scale. The company calls the effort “Greener Grazing” and it expects to be operating at commercial scale in two years, said Josh Goldman, the company’s chief executive officer.


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