Morning Commentary

Dec corn down 1 ¾ at $3.61

Nov beans down 3 ¾ at $8.485

The DOW is down

USD is weaker

Crude oil down $.95 at $72.22

Good morning,

Corn traders have all eyes on today’s USDA report. Average trade guesses have been painting a bearish outcome, with most looking for a slight bump higher in the U.S. yield from 181.3 to perhaps 181.8 bushels per acre. Despite the recently reported harvest complications and late-inning battles with disease, several inside sources are thinking the yield could ultimately push up closer to 183 bushels per acre.  In the end, this could push U.S. ending stocks north of +1.9 million bushels vs the USDA’s previous estimate of 1.77 million bushels. Another question is how the USDA plays their demand estimates, particularly “exports” and “feed and residual”? there are certainly some arguments that can be made for a higher export estimate. Despite the large livestock numbers and animals on feed, many inside the trade are looking for a sizable reduction in the USDA’s “feed and residual” estimate. Bottom-line, Bears are looking at ample U.S. supplies and the crops in South America are off to a fairly good start. Bears also pointing to forecasts for slowing global growth, a strong dollar, and ongoing trade tensions with the Chinese.

The amount of U.S. corn inspected for export in the week ended Oct. 4 totaled 1.351 million metric tons, up 132% form the 582,248 metric tons inspected the year-ago this week. IN the first 34 days of the 2018/19 marketing year, the amount of U.S. corn inspected for export totaled 5.806 million metric tons, 62.1% higher than in the same period in the previous marketing year. The largest share of U.S. grain exports last week was corn at 56.2% of the total grains inspected. Soybeans were second at 23.7%. (Source: Platts)

Soybean bears are hoping the USDA delivers on thoughts of a more burdensome balance sheet. Most inside the trade are anticipating another bearish adjustment to the soybean numbers. There’s a strong chance the new-crop ending stock estimate could push north of +900 million bushels. Thoughts are the USDA will increase old-crop ending stocks, while at the same time perhaps increasing their current new-crop yield estimate from 52.8 to over 53 bushels per acre. There’s some debate about “demand”, but most doubt there are many major changes coming to the numbers. Bottom-line, most are looking for a +40 to +80 million bushel increase in U.S. supply. World Ending stocks seem to be much more of a wild-card. In fact, there’s a chance the USDA’s domestic numbers could be bearish, but global numbers a bit more bullish than the trade is anticipating.

Excessive rains across the Midwest over the past week have slowed harvests and closed at least three locks on the upper Mississippi River, a key artery for shipping Midwest grain to U.s. Gulf exporters. They are talking about at least a two week period where nothing is going on from St. Louis to Davenport IA. On the Mississippi River, three locks between Davenport, Iowa, and Quincy, Illinois – locks 16, 17 and 20 – were already closed as of Tuesday due to high water. (Source: Reuters)

Brazil is on track to export a record $100 billion worth of agricultural products this year as demand for staple commodities like beef and soybeans from the South American country remain strong, the government said on Wednesday. The amount represents a 4.2 percent rise from last year and is slightly higher than the previous record of $99.97 billion in 2013, government trade balance data show. (Source: Reuters)

The USDA’s $12 billion trade aid package could end up shrinking after an agreement to update NAFTA was struck according to Ag Secretary Sonny Perdue. In an interview, Perdue said they will be recalculating the financial aid, depending on which tariffs come off. (Source: Reuters)


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