Morning Commentary

Dec corn up 1 ¼ at $3.68

Jan beans up 4 ½ at $8.865

The DOW is up

USD is stronger

Crude oil down $.55 at $63.14

Good morning,

Corn bulls are happy to see some positive headlines in regard to trade relations with the Chinese. FC Stone also released their latest production estimate, lowering the crop from 14.940 billion down to 14.830 billion bushels. Their average yield estimate was lowered from 182.7 down to 181.4 bushels per acre. The USDA is currently at 14.778 billion bushels, with an average yield of 180.7 bushels per acre. Informa will be out with their numbers at around 10:30am CST. Bears point to a third consecutive week of weaker than expected U.S. exports and increasing competition from South America and Ukraine. The USDA released their updated Grain Crushing Report. Total corn consumed for alcohol and other uses was 501 million bushels in September 2018. Total corn consumption was down -7% from August, but up +1% from September 2017. Corn consumed for beverage alcohol totaled 2.81 million bushels, down -21% from August 2018 and down -21% from September 2017. Corn for fuel was estimated a 449 million bushels, down about -7% from August 2018 but up +1% from September 2017.  The short term outlook is positive.  Closing over 371.5 would confirm an end to the pullback and suggest run to the last swing high (378.5) perhaps channel resistance around the mid-380 area.  Closing under 364 voids Thursday’s action.  System types are long – risking 363.25.

Soybean bulls welcomed a tweet by President Trump who posted “Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!” There’s also another round of positive commentary coming from the White House this morning. Bears argue this is only presidential positioning ahead of the midterms and neither side is actually any closer. Meaning its possibly just political jockeying by both leaders to try and stop the bleeding in their respective stock markets and more positively influence voters. There have also been some headlines circulating inside the trade regarding Brazil and the fact they might soon be looking to increase their biodiesel blend, which ultimately means more domestic soybean oil demand. In more traditional news, the USDA reported the U.S. soybean crush for the month of September at 169.3 million bushels, which was below most trade expectations, but still significantly larger than last year’s September crush of 145.4 million bushels. The short term outlook is positive.  The market is poised to test 906.25, perhaps 916.75.  A close under 861.25 is required to void yesterday’s action.  A spot close over 892 confirms a bottom.   Given a buy signal Thursday, system types are long – risking 847.  90 day implied vol surged 3 points Thursday.

A soybean cargo heading to China switches destination amid trade row. A vessel carrying soybeans from the United States to China changed its destination to South Korea, shipping data showed, amid a trade war that has decimated U.S. shipments of the commodity to the world’s top oilseed importer. The Star Laura, carrying 36,000 tonnes of American soybeans loaded in Seattle in late September, was due to arrive in the eastern Chinese port of Qingdao on Wednesday. (Source: Reuters)

Pacific Ethanol Inc cut biofuel production by -10% amid high inventories and weak margins, the company’s Chief Executive Neil Koehler told analysts on Thursday. Pacific ethanol owns 9 ethanol plants with a combined production capacity of 605 million gallons a year. Other companies have made similar economic run cuts, but “not enough” to address high inventories, Koehler said. (Source: Reuters)

Reports out of China show economic growth is slowing quicker than expected, business sentiment is down and export demand dipped sharply according to a Chinese government index. Things could get worse as President Trump has said tariffs on another $267 billion in Chinese goods will be ready if his meeting with Chinese President Xi Jinping later this month doesn’t go well.


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