Dec corn up ¾ at $3.685
Nov beans up 3 ½ at $8.485
The DOW is up
USD is stronger
Crude oil down $.27 at $67.32
Corn prices continue to trade in a range as traders argue and debate U.S. yields and if growth in demand can stay this strong. Competition from South America and Ukraine continue to keep U.S. exports debatable. . At the same time, we have significantly increased production estimates for South American production in 2019. Last year Argentina produced 32 MMTs, this year they are forecast to producer 41 MMTs. Last year Brazil produced 82 MMTs, this year they are forecast to produce 94.5 MMTs. There’s also talk that with Brazil’s early start to planting and cooperative weather we could see a sizable jump in second-crop corn acres. It’s still early, so that’s a difficult argument to make, but it’s certainly a bearish card that has been added to the deck. Bottom-line, all of this talk of potential increasing global production from our competitors is allowing the bears to question or trim a bit of anticipated U.S. export demand. Bulls are hoping the strong delays in the U.S. harvest and late complications with weather will force the USDA to further trim their yield and production forecast, ultimately tightening the U.S. balance sheet, and helping to keep prices supported. The short term outlook is neutral. Despite Friday’s rally, momentum remains negative. A close outside 362.25-371.5 is needed provide fresh targets. Given a buy signal Friday, system types are long; risking 360.75.
Soybean yields and late-harvested fields continue to be the big debate. Bulls argue there are still a lot of soybeans out in the U.S. fields and there’s clearly a yield drag in play. There’s starting to be more talk that the USDA will need to reverse their latest yield estimate. In the October report, the USDA bumped their yield estimate from 52.8 to 53.1 bushels per acre. Talk now is the estimate will need to be lowered in the next couple of reports as weather has thrown a few late-inning curve balls at a few producers in larger production areas. On the flip side, bears continue to point towards ongoing trade complications, a strong U.S. dollar and suspect global economic growth outlook. Adding additional headwind is the fact, South America is receiving very cooperative weather. The USDA is already forecasting the South American crop at +20 MMT’s over last year. The short term outlook is negative but the daily chart is oversold with momentum turning up. A close under 842.5 would signal a new wave down. A close over 872 is needed to confirm an end to the pullback. System types are short; risking 850.25.
United States ethanol industry is set to see three new plants come online over the next year, adding a combined annual production of 270 million gallons to the nation’s already ballooning ethanol oversupply. The industry has been plagued by overproduction and low demand since 2015. Over the past 5 years, ethanol production has increased by 10.5 percent, rising from 14.3 billion gallons in 2014 to 15.8 billion gallons in 2017. This is despite the fact that only one new ethanol plant began production in the years between 2015 and 2018. (Source: Oilprice.com)
The U.S. trade wars have allowed Canada’s agriculture industry to pump up sales of soybeans and wheat to China and pork to Mexico. But the same tariff battles are undermining commodity prices and eating into Canadian farmers’ profits even while the grab more market share. Canadian soybean and hog farmers are demanding compensation from Ottawa. While the U.S. government has provided its farmers a $12 billion aid program to limit the damage from lost purchases by China, Canada has provided farmers no support to ease the sting of falling prices in the U.S. which undermine the value of Canadian crops. The key is, Canadian farmers fell that when the U.S. goes does, They go down. (Source: Reuters)