Morning Commentary

Dec corn up ¾ at $3.6825

Nov beans up 2 ¼ at $8.615

The DOW is down

USD is stronger

Crude oil up $.17 at $74.50

Good morning,

Corn bulls are talking about improved trade relations and steps in the right direction with Japan and the European Union. Bulls are also talking about significant harvest delays and heavy rains here in the U.S. complicating issues in many parts of the upper and western-Midwest. Bulls are also talking about continued strong export demand numbers and lower global supply than the past couple of years. On the supply side, Informa bumped their U.S. crop estimate higher to 14.890 billion bushels on an average yield of 182.1 bushels per acre. The USDA is currently forecasting the U.S. crop will total 14.827 on an average record yield of 181.3 bushels per acre. Next week will be interesting, as President Trump travels to Iowa to perhaps announcing full-year E15 on Tuesday, then on Thursday, the USDA releases their October supply and demand report, which is still a bit of a wild-card. Many inside the trade believe the USDA is going to again bump their yield estimate higher and make some slight adjustments to demand.

Soybean prices are at about the same level as last Friday. There’s really nothing fresh or new in regard to Chinese trade headlines or South American weather, hence no significant movement in soybean prices. Bears argue there is definitely another round of negative headlines in the hopper surrounding U.S. and Chinese trade relations. The question is will President Trump ruffle feathers and raise the stakes with the Chinese as we are now within 30-days of the U.S. mid-term elections? Bulls believe we might be in a bit of a “safe-zone” this close to the election, hence negative trade headlines might not appear, allowing for some free swings to the upside. The problem is there’s still a USDA report due out next Thursday which could deliver another fundamental nail in the coffin. There’s talk the yield could work itself higher and overall demand might take a small step backwards, which ultimately works to make the balance sheet more burdensome. The big question remains, will the Chinese be able to ration supplies long enough to go without U.S. soybeans? Producers in Brazil got the crop in the ground early and most areas are off to a good start, meaning some soybeans could theoretically be available to export to China by late-December or at least by early-January. Is China bluffing by saying they can ration and make do without 8 to 10 MMTs of missing demand? This is certainly high stakes poker at it’s finest.

Ag Secretary Sonny Perdue told a crowd in Washington DC yesterday that the United States “probably made a mistake” becoming too trade dependent on China and added that the administration was pursuing trade deals elsewhere. Perdue reminded the gathering that there’s a hungry world out there besides Canada, besides, China, and that the U.S. would be pursuing new agreements with the European Union, Japan and India, among others.

An Arizona company is recalling 6.5 million pounds of various beef products because they may be contaminated with salmonella, the USDA announced Thursday. The products, identified as being supplied from JBS Tolleson of Tolleson, Ariz., are raw, “non-intact” beef items including ground beef that was shipped nationwide. I’m told at least 57 people in 16 states have reported getting sick. The USDA said the meat was packaged between July 26 and Sept. 7. They have an establishment number “EST. 267” inside the USDA mark of inspection. (Source: USAToday)


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