Morning Commentary

March corn down 1 at $3.8375

Jan beans up 2 ¾ at $9.145

The DOW is up

USD is weaker

Crude oil up $.02 at $53.27

Good morning,

Van Trump says “Corn bulls are happy to see stronger prices. I know it doesn’t feel like it, but yesterday was one of the top-10 highest closes for the MAR19 contract since mid-August. Technical bulls would love to see the MAR19 contract close back above $3.90 per bushel, something that’s only happened once since mid-August. There’s been some rumors circulating that Chinese buyers might come in and ink a contract to buy a significant amount of U.S. corn. I’ve heard rumors and talk of numbers between 400 and 500 million bushels. I’ve also heard rumors and talk that the Chinese could also ink a deal to buy a heavy dose of U.S. ethanol.”

Soybean bulls are talking about rumors of Chinese buying. There’s been some talk that a Chinese delegation will be traveling to the U.S. in mid-December, perhaps to make a symbolic purchase. There’s no specificity or details. Insiders are wondering if it will be the typical “frame contract” where Chinese buyers promise to purchase a large amount of new-crop soybeans further out in 2019. Bears argue that talk is cheap and portions and parts of these contracts can and have been canceled or kicked down the road in years past. The real question is will Chinese buyers purchase any of burdensome old-crop supply?  There’s word the Chinese have been snooping around and checking out prices off the PNW, but to this point still just rumors and talk. It feels like there might be a temporary put in place during this 90-day trade truce that is currently in play. It’s tough to envision a lot of fresh new bearish money coming into the market with this window of opportunity now open for the Chinese to purchase U.S. bushels.

Perdue speaking yesterday suggested the second installment of trade aid is not likely to be released until after this week or early next week, while USDA works with the White House budget shop to finalize the plans. Now, whether the U.S. – China agreement will affect the new payment rates for commodity producers is yet to be seen. Speaking on this, Perdue said that nothing has changed from the tariff damage that farmers have already experienced. But he also noted that it’s hard to determine the impact of the new trade truce without more details.

Record pork production and trade disputes continue to be the near-term drag on prices. However, according to Purdue University agricultural economist Chris Hurt, lean hog futures are more optimistic for spring and summer prices to be high enough to provide profitability in the second and third quarters of 2019. Trade dispute have limited U.S. pork sales in China and Mexico beginning last summer. Pork exports to China are down 19% for this calendar year and most of the decrease has been since the summer when Chinese tariffs on U.S. pork were put in place. Hurt believes hog prices will lift by spring and summer of 2019 as traders expect the tariff situation to get worked out by then. (Source: Pork Business)

Abandoned coal mines are often held up as symbols of the changing state of climate or the economy. But academics at the University of Nottingham see in them the potential future of food and have patented a new system revolving around what they call “deep farming”—turning old coal mines into fully functioning farms. Keep in mind, Deep farms would have advantages that current land-based farms lack, including a controlled climate uninfluenced by weather and no need for expensive farming equipment. It’s worth mentioning, Deep farming would incorporate many existing technologies—hydroponic planters with nutrient-rich water, aeroponic plants growing with a mist, and LED units to create photosynthesis. And if they can use groundwater and be located close to the communities they serve, deep farms could reduce the CO2 emissions of farming and cut down on transportation costs at the same time.


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