Morning Commentary

Dec corn down 2 at $3.6625

Nov beans down 1 at $8.68

The DOW is down

USD is stronger

Crude oil down $.80 a $73.54

Good morning,

Corn prices have climbed to multi-week highs on thoughts of improved trade negotiations, late U.S. harvest weather complications, and continued strong demand. Washington has inked deals with both Mexico and Canada, now there are rumors that U.S. leaders are considering a ‘Trade Coalition’ with Japan and the European Union to confront China. Rains have been heavy in many parts of the U.S., with several areas still having corn in the fields. The rains will continue through mid-week adding big complications in parts of the Plains and northwestern Midwest. There’s also talk of heavy snow by mid-week in parts of North Dakota. The longer term 2-to-4 week forecast shows things turning warmer and drier, but between now and then the market could become more concerned. The short term technical trend for December corn is positive.  Target 375.5-380.  The market is overbought, momentum is turning lower and approaching a sell signal.  Setbacks that hold trend line support (today at 362.5) promotes rallies.  A close under 359 warns of a pullback.  System types are long with sell stops around 362.5.

The downturn in U.S. ethanol exports to Brazil, while somewhat expected, was another blow to biofuel producers reeling from low prices and near-record large stockpiles. I’m told only 4,395 gallons, or about 105 barrels of U.S. ethanol were exported to Brazil in August, down sharply from 24.5 million gallons, whic is about 583,400 barrels in the same month a year ago. The monthly imports were the smallest since Brazil brought in no U.S. supplies in October of 2015, USDA data showed.

Soybean bulls have been able to add about +60 cents to the lows set back in September. Heavy rains and extreme delays in the harvest are now adding to the recent gains. Some important production areas are now battling flooded fields and increasing complications. There’s talk that parts of central North Dakota could see some fairly heavy snow by mid-week. Last week, the USDA elected to leave their weekly crop-conditions “unchanged” at 68%: Illinois showed a whopping 80% of their crop in “Good-to-Excellent” condition; Iowa showed 74% rated GD/EX; Nebraska 85% rated GD/EX; and Minnesota 72% rated GD/EX. It will be interesting to see if those ratings get hit in this afternoons report. The trade will also be eager to see the USDA’s “harvest” estimate. Last week, the USDA estimated 23% of the U.S. crop had been “harvested” vs. the 5-year average of 20%. It seems like we’ve been averaging around 60% of the U.S. soybean crop harvested by October 15th. The short term technical trend for Nov beans is positive.  The target is 870-880.  Holding former trendline resistance (857.5 today) helps support rallies.  The market is overbought, momentum is turning lower, and approaching a sell signal.  A close under 848 warns of a setback.  System traders are long risking 851.5.

Pickup trucks are getting larger and more expensive. Because gas is cheap, pickups are in demand, which boosts pickup prices. Edmunds’ data shows, through September, the average transaction price for a full-size pickup is $48,377, a 48-percent boost from 10 years ago and a 19-percent hike from 2013 for the same period. A 48% increase in price is the highest price increase for that time period out of all vehicle categories. Part of that rise in price comes from the fact that more and more people are using their trucks as family haulers, rather than strict work vehicles. When you start doing that, you’ll also start looking for more luxury features. (Source: Edmunds)


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