Morning Commentary

March corn up 1 ¼ at $3.81

March beans up 3 ½ at $9.1625

The DOW is up

USD is weaker

Crude oil up $1.17 at $48.26

Good morning,

Corn prices are slightly higher this morning as bulls point to a little more stability and strength in the oil market, greater weather uncertainty in South America, and hints of improved agricultural trade negotiations with the Chinese. Unfortunately, or perhaps fortunately, due to the partial government shutdown we are not able to see the weekly ethanol or weekly export numbers. There’s also talk that we might not be getting the end of year USDA reports next Friday.  Trend funds are thought to be long 39,500 lots.  The short term trend is neutral.  Consecutive closes outside 375.5-381.75 should provide fresh trending targets.   Long, system types will find sell stops around 377. 

Soybean bulls are pointing to broader weather complications in South America and talk that production estimates could start to fall further. As I mentioned in previous reports, the USDA is currently forecasting a record Brazilian crop of 122.0 MMTs. I continue to hear talk that the crop could drift significantly lower on lack of adequate rainfall in several areas, perhaps -5 to -10 MMTs lower. There’s also some talk that Chinese buyers are also looking at U.S. soybeans a bit further out on the time horizon, which would certainly be considered more optimistic. Trend funds are thought to be short 64,500 contracts.  The short term trend is neutral.  Consecutive closes outside 893-917.75 would provide fresh trending targets.  Long, system types will find sell stops around 909.5. 

Rain and hail storms have slowed soybean harvesting in Argentina over the last week, washing out some fields and raising concerns that continued wet weather could put the 2018/19 crop at risk, the Buenos Aires Grains Exchange said in a report on Thursday. Early in the season, the exchange said it expected a 53 million tonne soybean harvest, up dramatically from the previous season, which was hurt by drought. (Source: Reuters)

Grains trader Cargill reported a 20% drop in its fiscal second quarter 2019 net earnings, as global trade tensions hit the bottom line along with challenges in the Chinese hog sector and a struggling U.S. dairy business. 2nd quarter revenues fell 4% to $28 billion, bringing the year-to-date figure to $56.7 billion. The company’s quarterly adjusted operating earnings were $853 million, down 10% from $948 million. The company did highlight strong oilseed processing results in North American and Europe as a bright spot, while grain exports from the U.S. and Canada, biodiesel production in Europe and better crop yields in Argentina boosted the company’s origination and processing unit’s performance.

Due to lower margins with their ethanol production, Pacific Ethanol will idle what is referred to as the western portion of its ethanol plant in Aurora, Nebraska. From what I understand, it’s a portion of the plant that has 110 million gallons in annual capacity.  The firm had already shut a smaller eastern portion of the plant last month and the idling of the western portion of the plant could last until the summer, according to the report.


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