Morning Commentary

Dec corn down ½ at $3.585

Jan beans down 7 ¼ at $8.7375

The DOW is up

USD is weaker

Crude oil up $.90 at $51.32

Good morning,

Corn prices are trading near the lower-end of their recent trading range. The MAR19 corn contract has essentially traded between $3.70 and $3.90 per bushel since late-September. Bulls are pointing to lower U.S. production estimates as U.S. weather continues to complicate harvest. Bears are pointing to much larger production coming out of South America this year. The short term outlook is negative.  Consecutive closes outside 368.25-382.75 would provide fresh short term targets.  Short, system types are risking 373.  Based on the trade count, trend funds are expect to be short 52,500 corn in tonight’s Commitment of Traders report.  Options are implying an 365.25-376.25 trading range this week.

Soybean traders will have all eyes on headlines surrounding the upcoming meeting between President Trump and Chinese President Xi, scheduled for the end of this week in Argentina. Most sources see little chance of a deal being worked out, but perhaps some groundwork laid that will support future and further talks. There is starting to be more talk that African Swine Flu is perhaps worse than being reported inside China. Its more realistically between 500,000 and 1 million pigs have been killed in China during the past four months. As fear of the virus spreads across the country, falling pork demand and rising feed costs, are massively squeezing Chinese pork producers and creating self-fulfilling demand destruction. At the same time, we are hearing more reports out of Brazil that their soybean crop could be much larger than the current USDA estimate of 120.5 MMTs. The short term trend is neutral.  Stable trade at recent congestion should build a base for rallies.  Consecutive closes outside 865.75-887.25 would provide fresh short term targets.  Long system types are risking 866.  Based on the trade count, trend funds are expect to be short 109,500 beans in tonight’s Commitment of Traders report.  Options are implying an 860-890 trading range this week.

According to reports, the National Corn Growers Association has written a letter to Ag Secretary Sonny Perdue this past week asking for the second round of trade aid to include more money for the corn sector. NCGA wants USDA to include ethanol and distillers grains in its calculation of damages this time. Corn growers got $96,000 out of a total $4.7 billion in direct payments in the first round. (Source: NCGA)

It looks like any nondescript industrial park warehouse, but the new Deepwater Farms facility in southeast Calgary produces fresh, local food daily using technology that some believe could be the future of agriculture. This urban farm, located in a 10,000-square-foot building, is the city’s first commercial-scale aquaponics facility — meaning it combines hydroponics and aquaculture to raise both leafy greens and fish. Giant tanks house as many as 10,000 fish of varying ages and sizes, currently Deepwater is raising sea bass, and the waste from the fish is then broken down into nitrates that are used to fertilize the racks upon racks of lettuce, herbs and other greens growing under giant LED lights. The unconventional technology has given Deepwater the capacity to harvest about 1,000 pounds a week of organic, locally grown produce. The company expects to triple that output once it is fully ramped up in late 2019. It can also harvest about 2,000 pounds of fish a month — fresh, sustainable seafood that can go straight to the plates of landlocked Calgarians. From what I understand, company founder Paul Shumlich literally stumbled across the concept of aquaponics one day on the internet. What really spoke to him was the closed-loop symbiotic system between the fish and the plants, and that it was organic. Might be food for thought… could your area use something like this for local markets?

Soil testing at the DNA level is no longer just for the lab. In 2015, Diane Wu and Poornima Parameswaran changed that, and brought soil DNA sequencing to every farmer with their startup Trace Genomics. Using machine learning to analyze soil samples, the company can determine what microbes are present in the soil, enabling them to provide a report to farmers about what crop varieties they need to grow and what types of inputs would be ideal to use during the growing season. It’s worth noting that just last week Trace closed a Series A funding round for $13 million, bringing the company’s total venture funding to over $19 million. Up to this point, Trace has worked to help improve yields and also provide insight into disease management for crops like lettuce, berries, almonds and more. From what I understand, by this time next year, Trace should be ready to be used on corn and bean acres as well. At that point, the company expects to process over a thousand soil samples a week across multiple types. An important factor moving forward for corn and bean producers is the growing use of biological fertilizers, and the tests from Trace that will be able to guide farmers into what inputs make the most sense for what you are growing. Interestingly, you can use the process throughout the entire season beginning with pre-planting, where you can determine planting dates, seed variety, inputs and practices for planting. In season, tests can detect or confirm disease pressure, while at the same time determining why some acres are more productive than others. I’m told you can also use Trace to determine your optimal harvest date as well as creating post-harvest tests act as the source of traceability at the soil level for your crops. Trace believes they will provide a new tool in the fight against sudden death syndrome in beans. The problem with the disease is, plants affected by this fungal disease don’t appear until late in the growing cycle, when there isn’t time to treat the plans and save the crop. Wu says that her company’s product can detect the presence of the disease early, giving farmers better insight about what to do. Sounds like something to consider for your toolbox! (Source: Forbes, genomeweb, tracegenomics)


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