Morning Commentary

Dec corn unchanged at $3.6675

Nov beans up 1 ½ at $8.405

The DOW is up

USD is stronger

Crude oil down $.85 at $66.19

Good morning,

Corn traders continue to debate U.S. production. Bulls believe the yield is going to come down a bit from the current USDA estimate of 180.7 bushels per acre. The market however, currently seems content trading in a narrow range between $3.55 and $3.75 per bushel until it learns more. Bears continue to question growth and strength of U.S. demand, worrying the balance sheet could get larger if demand can’t hold up to some of the lofty expectations. Not that demand is weak, but perhaps it will find it tougher reaching some of the earlier and more optimistic estimates?  The USDA reported the U.S. corn harvest is right on pace at 63% complete vs. the 5-year historical average of 63%. States the furthest behind their traditional pace are: South Dakota -9%; Iowa, Kansas, Nebraska, North Dakota all -8% behind; Pennsylvania -5%; North Carolina and Texas -1%. Minnesota is the only state running right on schedule at 58% harvested. States running ahead of schedule are: Indiana +125%; Illinois +105%; Michigan, Ohio, and Wisconsin +8%; Missouri +7%. States over 75% harvest include: Kansas 76%, Indiana 77%, Illinois and Missouri 90% complete. States including Iowa, Michigan, Nebraska, South Dakota and Wisconsin were yet to get past the half point.

Soybean bears continue to consider recent headlines out of China, and the fact government officials are desperately trying to reduce meal consumption. There are many stories circulating inside the trade about their approved lowering of protein in hog feed by -1.5% and in chicken feed by -1.0%. The Chinese government reports that are circulating, estimate that move will help them trim around 14 MMTs of soybean consumption. Interestingly, many of us inside the trade had heard for weeks that feed mills in China had already made that move, so it’s hard to tell if the market is really reacting to the recent headlines or perhaps some larger players had been thinking the talk of China rationing demand, was just talk, and now it seems more real with official headlines circulating. Here at home, U.S. exports could continue to lag expectations and pressure prices lower, especially if North and South American crops come out of the fields anywhere near forecast. The USDA showed the U.S. soybean harvest at 72% complete vs. the 5-year historical average at 81% complete. States the furthest behind include: Kansas -28%; South Dakota -17%; Nebraska and Wisconsin -16%; Iowa -15%; North Dakota -14%; Missouri -10%; Minnesota -8% and Ohio -5%. States running ahead of schedule are: Indiana +3%; Illinois +2%. States over 70% harvested include: Iowa 71%, Nebraska 74%, South Dakota 77%, North Dakota 78%, Indiana 80%, Illinois 86%, Minnesota 87%.

Following his Presidential victory Sunday, Jair Bolsonaro said that Brazil would again take the lead in ethanol production globally. Until the U.S. took over as the global a few years ago, Brazil held the top spot and have vowed to regain their former position.


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