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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