Morning Commentary

Dec corn up ¼ at $3.6675

Jan beans up 5 ½ at $8.8375

The DOW is up

USD is weaker

Crude oil up $.57 at $56.26

Good morning,

Corn bears point to the massive break in crude oil as an additional headwind. Not only does it put additional pressure on ethanol margins but it also adds to the overall bearish global macro landscape. Weather in Brazil is viewed mostly as cooperative. Argentina has a few areas that are battling too much rainfall. Overall, South America and the Black Sea region are going to create more export competition. Exports in the latest USDA report were lowered by -25 million bushels to 2.450 billion, but this is still a record level. The USDA also recently showed an additional +149 MMTS in corn stocks base on a multi-year adjustment. Essentially this new projection implies that China’s share of global corn stocks is approaching 70%, close to its record-high share in 1995. The short term outlook is neutral while momentum remains negative.  Consecutive closes outside 356.25-374.5 would provide fresh targets.  System types are short, risking 374.75.

Soybean bears are pointing to increasing estimates for Brazilian production and exports. Bears are also pointing to continued uncertainty surrounding U.S. and Chinese trade negotiations. Bulls are pointing to more positive talk from Washington leaders like Steve Mnuchin and Larry Kudlow. Treasury Secretary Mnuchin and top Chinese official are reportedly talking trade ahead of Trump-Xi meeting. .  The short term outlook is neutral to slightly positive but the market posted an outside day lower Tuesday.  Consecutive closes over 893 is constructive.  A close under 865.75 is needed to void the outlook.  System types are short, risking 888.

Tyson Foods Inc. reported quarterly sales on Tuesday that missed Wall Street estimates, as the top U.S. meat processor was hit by lower demand for chicken, sending shares down nearly 7%. Overall, sales fell 1.4% to $10 billion. Analysts on average had expected revenue of $10.26 billion, according to IBES data from Refinitiv. (Source:Reuters)

The trade wars are causing Americans to lose their taste for more expensive chicken and turn to cheaper beef and pork. U.S. pork exports to China and Mexico have been reduced due to tarrifs, leaving cheaper bacon and ribs at home. Restaurants are seizing on the increases to promote hamburgers instead of chicken while grocery stores have featured pork. The USDA is projecting per capita chicken consumption to raise only about 1.2% next year, compared to gains of 4.3% for pork and 2.6% for beef. (Source: Reuters)


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