Morning Commentary

Dec corn up 1 at $3.68

Nov beans up 1 ½ at $8.5825

The DOW is up

USD is stronger

Crude oil  down $.19 at $68.93

Good morning,

Corn bulls are trying to stop the recent slow bleeding. The market is coming off four down days in a row to end last week. Prices are down over -10 cents from last Monday’s high, but for the moment seem to be comfortable trading in a sideways channel between $3.60 and $3.80 per bushel. Technical bulls are hoping to see the $3.60 level hold as nearby support in the DEC18 contract. A close below that level, would certainly open up further downside and perhaps bring the $3.50 level back into focus. The current weather forecast here in the U.S. is offering enough of an opportunity to harvest the crop that most in the trade see no reason for additional risk-premium.

Soybean bears are again pointing to ongoing trade complications with the Chinese and fear of more “cancelations” circulating. Even though, with the 25% tariff, U.S. soybeans are competitive in price with those out of Brazil, Chinese importers simply don’t want to take the chance on seeing the government kick their cargoes on arrival. Hence, the world’s top buyer continues to show very little interest in U.S. soybeans. Bears are also pointing to an improved window of opportunity for U.S. producers to get a record setting crop out of the field without a massive amount of damage. Weather in South America is also very cooperative. Brazil appears to be off to one of their fastest starts (close to 40% planted) and look as if they will follow through on planting a record number of acres.

A record feedlot inventory number for October hit 11.4 million, up 5.4% from last year. Even so, expectations were 100,000 head lower for the month. Placements for the month of September saw a 4.6% decrease from last year, with an expected 0.1% increase. As far as September marketings, those were lower by 3.6% from a year ago.

Tariffs on U.S. pork headed to China are taking seeing prices increase by as much as 70%. It seems as Chinese meat consumption has exploded, meat processors there are widening their supplier base now to guard against shortages as U.S. prices have skyrocketed. Keep in mind the African swine flu outbreak which is threatening domestic supply for China and could change the landscape quickly.

An outbreak fo African swine fever in China has pork buyers looking to elope and South American countries to fill orders. U.S. imports are more expensive, with upward of 70% tariffs as a result of the Trump administration’s trade tensions with Beijing. The Wall Street Journal dives in to the recent trend. (Source: Wall Street Journal)


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