Morning Commentary

March corn up 1 at $3.7675

March beans up 4 at $9.11

The DOW is down

USD is weaker

Crude oil up $.80 a $47.34

Good morning,

Corn prices continue to trade in an extremely tight range. I wish I had something exciting or new to talk about, but there’s really nothing fresh in the headlines. Bulls are waiting to see if Chinese trade negations can bring about purchases of U.S. corn, ethanol, and DDGs. Bulls are also hoping to see the USDA further reduce their U.S. production estimate in next weeks end-of-year report, scheduled for a January 11th release date (next Friday). Bears argue that the USDA could reduce their U.S. demand estimate a bit to help offset the lower adjustment in production. Bears are also pointing towards talks of U.S. producers planting more corn acres in 2019.

Soybean traders continue to debate the latest Chinese headlines. Traditionally, weakening economic data out of China, along with tech companies like Apple and multi-national industrial companies like Caterpillar confirming their economic slowdown, would be considered a negative headwind for the soybean market. Interestingly however, we find in our current quandary, talk of a further weakening Chinese economy is actually being digested by many in the market as being somewhat bullish. Bulls are also pointing to ongoing rumors that tariffs on U.S. soybeans might soon be lifted by the Chinese. Bears point to the fact, as each day passes, we take a step closer to the March 1st deadline. Bears also point to the fact U.S. Trade Representative Robert Lighthizer is leading the negotiations and appears to be a stickler for the details and continues to appear as if he is looking for much larger structural changes from the Chinese in regard to technology and theft of intellectual property. Perhaps we will learn a lot more next week, when trade officials from both countries will sit down in Beijing for the first face-to-face negotiation since the leaders’ dinner. There’s also talk the USDA could walk back their current production forecast for Brazil? Last month the USDA bumped their estimate for Brazil from a record 120.5 MMTs up to an even larger record of 122.0 MMTs. Since then a few major production areas inside Brazil have had to battle significantly lower rainfall totals. This has prompted many inside Brazil to start lowering their estimates, with some sources now talking sub-120.0 MMTs. We have actually heard a couple of numbers floating around that were sub-115.0 MMTs In case you are wondering, Brazil produced a record 120.3 MMTs this past season. The Argentine production estimate still seems to be in the 55.0 to 56.0 MMTs range, which is substantially higher than the 37.8 MMTs produced last year.

Before sales can be made starting in February, slaughter facilities in China will now have to test pig products for African swine fever (ASF), as well as slaughter hogs from differing origins separately. From what I understand, if ASF is found, slaughterhouses have to cull all pigs and suspend operations for at least 48 hours. It is believed that there are currently many more that of the 90 cases of ASF that China has reported since August.

According to the China’s customs authority, they are soon to allow U.S. rice imports. It’s not clear how much brown, polished or crushed rice China will buy. Rice makes up only a small portion of U.S. ag exports but that could soon change. This newly open door is signaling a warming of relations between the world’s two biggest economies after a frosty year of tit-for-tat tariffs. (Source: Reuters)

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