Morning Commentary

Dec corn down ¾ at $3.7325

Jan beans down 1 ¾ at $8.84

The DOW is down

USD is weaker

Crude oil up $.03 at $63.13

Good morning,

Corn traders are paying close attention as the market might soon start to run into more have technical resistance on the charts up between $3.80 and $3.90 per bushel, which many consider the high-end of the range. Keep in mind, the DEC18 contract hasn’t closed above $3.90 per bushel since June 13th, almost six months ago. The USDA reported that the U.S. crop is now 76% harvested vs. the historical 5-year average of 77%. Keep in mind, last year at this point we only had 68% of the crop harvested. States running the furthest behind schedule are: North Dakota -13%, South Dakota -11%, Nebraska -7%, Kansas and Iowa -4%.

The US exported 340.3 million liters (89.9 million gallons) of ethanol in September, 4% higher than a year ago but 25% lower month on month, according to US Department of Agriculture data. Given September’s 31 days, exports averaged just under 69,045 b/d over the month, according to the data, released Friday. Tumbling prices since the end of July may have opened some arbitrages to various destinations, but export demand remained lower than market participants had hoped with the absence of China from the market.

Soybean bears are digesting more headlines about slowing Chinese demand. Reports circulating yesterday, showed the USDA attache in China slashing their demand estimate, lowering their forecast for Chinese soybean imports down to 85 MMTs vs. the current USDA estimate which is up at 94 MMTs. The decline in demand is obviously associated with trade rationing and fear surrounding African Swine Fever. If the Chinese can really trim -9 million in overall demand, there’s talk they can make it until the Brazilian harvest. Bulls are talking about rumors that new Brazilian officials could eventually consider adding a 10% tax to soybean exports to help support domestic users and crushers. The short term outlook is positive.  The market looks poised to test 906.25, perhaps 916.75.  A close under 862 is needed to void the outlook.  System types are long – risking 862.75.

Natural-gas futures rose +8.6% to $3.5670 a million British thermal units Monday, their best day since December 2015 and their highest close since January. Natural gas is up +21% in 2018, with analysts anticipating shortages ahead of peak heating season this winter. (Source: The Wall Street Journal)

According to data released by the USDA and compiled by USMEF, global pork export value fell 7% to $470.2 million. Pork muscle cuts were 2% higher than a year ago at 146,542 mt, but value still declined 3% to $397.6 million. September variety meat exports dropped significantly in both volume (32,881 mt, down 18%) and value ($72.6 million, down 21%). For January through September, combined pork and pork variety meat exports were 1% above last year’s record pace at 1.81 million mt and 2% higher in value at $4.79 billion. For pork muscle cuts only, exports increased 6% from a year ago in volume (1.46 million mt), valued at just under $4 billion (up 3%). (Source: nationalhogfarmer)

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