Morning Commentary

Dec corn down 3 at $3.705

Jan beans down 2 ¾ at $8.7625

The DOW is down

USD is stronger

Crude oil down $.93 at $59.74

Good morning,

Corn bulls are pointing to a larger reduction than the trade was anticipating in regard to the U.S yield and ending stock estimate. Bears are pointing to a massive global curve ball involving Chinese supply. The USDA lowered U.S. corn production by -152 million bushels from 14.778 down to 14.626 billion. The U.S. yield was lowered from 180.7 down to 178.9 bushels per acre. Unfortunately, demand was also trimmed. Feed and residual use was lowered by -50 million bushels based on a smaller crop and higher prices. Exports were reduced by -25 million bushels based on expectations of increased competition from Ukraine. Corn used for ethanol was left unchanged. Net-net, corn ending stocks were lowered by -77 million bushels from last month. .  The short term outlook is positive.  The market is flirting with resistance at 380+/-.  A close over 382.75 should support a run to 396.  Closing under 365.75 voids recent positive action.  Given a sell signal Thursday, system types are likely to get whipsawed above 379.

Soybean traders are debating a record ending stock estimate vs. a potential trade deal with the Chinese in the coming weeks. Bulls believe we might have a temporary G20 put in place as President Trump continues to talk about steps towards a trade resolution. President Trump is currently scheduled to meet with Chinese President Xi at the end of November in Argentina. There’s some talk inside the market that very few bears are wanting to place big bets going into the meeting, which between now and then, might keep the downside fairly limited. After that however, if no resolution or steps towards a resolution are announced, all bullish bets are off, and the market will quickly look to how it’s going to digest the largest global stocks-to-use ratio ever. As for yesterday, the USDA lowered U.S. soybean production by -90 million bushels on lower yields. The soybean yield was lowered by -1.0 bushel per acre from 53.1 down to 52.1. .  The short term outlook is neutral to slightly positive.  A close over 893 would lead to a test of 916.75.  A close under 864.25 is needed to void the outlook.  Given a sell signal Thursday, system types are risking 893.

We are getting reports out of China that its top grain-producing province, Heilongjiang, almost doubled its 2018 subsidies for soybean growers, an official news website reported on Wednesday. Heilongjiang also slashed 2018 subsidies for growers of corn, another major crop in the region. So, we see China taking steps to boost soybean acres. However, in recent years they have taken measures to whittle down their huge corn stockpiles, including encouraging farmers to switch from corn to other crops like soybeans and boosting industrial demand for the grain. This new policy with further inhibit the potential for corn acreage growth in China. We’ll have to keep our eye on Chinese corn prices over the coming year… (Source: Reuters)

The National Pork Board (NPB), United Soybean Board (USB) and National Corn Growers Association (NCGA) announce the signing of a Memorandum of Understanding (MOU) on a sustainability research platform that will benefit all three organizations and their producers. This research program will include the sharing of completed research, coordination on current and planned research. They are hoping that in joining efforts, they can help direct pig and grain farms to adopt conservation measures that deliver benefits to the environment and to farm resilience and profitability. (Source: NCGA)

New Studies are showing that farmers are overproducing grains, fats and sugars, meaning more than the nutritional needs of the current population. What is needed in order to “eat right” are more fruits, vegetables and to a lesser degree, protein. I’m told results were measured against the standard of everyone eating a healthy diet. Using the Harvard University’s “Healthy Eating Plate” guide, which recommends that half of our diet consists of fruits and vegetables; 25%, whole grains; and 25%, protein, fat and dairy, researchers found that we now produce 12 servings of grains per person instead of the recommended eight; five servings of fruits and vegetables instead of 15; three servings of oil and fat instead of one; three servings of protein instead of five; and four servings of sugar instead of none. It’s worth noting that because carbohydrates are relatively easy to produce and can feed many people, developing countries focus on growing grains. Along the same lines, as developed countries subsidize grain and corn production in order to become self-sufficient, they generally invest their research dollars to innovate those crops, leaving the healthier fruits and vegetables with no funds. Another insight from the study revealed that bringing food production in line with the nutrition levels would actually take 123 million fewer acres. By calculating how much land is currently used for farming and how much would be needed if everyone followed the nutritional recommendations, researchers projected those numbers for 2050, when the global population is expected to reach 9.8 billion. Moving forward if we are going to see fewer acres get used, it will require more consumers to eat less meat. We are definitely seeing more investments and articles in alternative proteins, from cultured “clean” meat to plant and insect-derived proteins. I know my generation probably isn’t 100% on board with putting aside real meat, but definitely believe my kids and grandkids who have been inundated with the green message will. (Source: Sciencedaily)


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