Morning Commentary

March corn up 1 ¾ at $3.84

March beans down 2 ¼ at $9.22

The DOW is up

USD is stronger

Crude oil up $.68 at $49.20

Good morning,

Corn bears are pointing to what could be defined as weaker demand. The USDA’s Grains Inspected for Exports weekly report was released despite the U.S. Federal Government shutdown as it is financed through available funding by user fees. The weekly export inspections data showed just 501,541 metric tons, a fairly sizable drop in U.S. exports, down roughly -47% from the previous weeks total just above 950,000 MTs, and the lowest weekly volume since November 9, 2017. To this point in the 2018-2019 marketing year (125 days), the amount of U.S. corn inspected for export has totaled 18.455 MMTs, +61% above the same period in the previous marketing year and almost 30% of the USDA’s projection of just over 62 MMTs. Unfortunately, last weeks number was below the weekly pace needed to reach the USDA’s estimate for exports, which is currently 2.450 billion bushels. Hence it gives the bears another reason to question ongoing growth in demand. Japan was the biggest buyer of corn both from the Gulf and PNW.

Soybean bulls are talking about reports that Chinese buyers were once again in the U.S. market, purchasing at least a few cargoes of U.S. soybeans. The details remain extremely fuzzy, but the takeaway is the Chinese are at least interested and moving forward with purchases of U.S. soybeans. The question is, once the dust settles and smoke clears in Washington and we learn just how many bushels the Chinese have purchased, will the trade be bearishly disappointed or bullishly surprised? These small purchase make it tough to get the bulls excited. Technically, the MAR19 contract is starting to run into much heavier resistance on the charts.  We are once again bumping up against the 200-Day Moving Average, a hurdle that has been very hard to clear. Producers who have more old-crop bushels to price might want to be paying very close attention.

China’s major pig farmers sharply cut 2018 profit estimates after fast-spreading African swine fever hit prices and demand for pork in the world’s largest hog producer. Two major hog farmers, Muyan Foods and Wens Foodstuff Group saw profits down 80% and 40% respectively from 2017. Remember, China has confirmed about 100 outbreaks of African swine fever since August last year across 23 provinces. (Source: Reuters)

The IRS will pay tax refunds even though the agency is subject to the federal government shutdown, after the Trump administration reversed a long-standing policy. The decision, announced Monday by the White House Office of Management and Budget, would remove one of the biggest potential pains for Americans from the shutdown and allow hundreds of billions of dollars to flow once tax filing opens later this month in the event that the shutdown lasts that long. (Source: The Wall Street Journal)

The U.S. Grains Council is rolling out the good news that a warm and moist growing season resulted in near-record yields and very good quality for the 2018 corn crop. The 2018/19 “Corn Harvest Quality Report” is the Council’s eighth annual corn quality survey. According to it, the majority of 2018 corn crop conditions were rated as good or excellent during the growing season, leading to strong plant health, good kernel size and a projected crop of 371.52 million metric tons (14.626 billion bushels), the third-largest crop on record. Remember, this report is key for providing timely information about the quality of the corn crop as it enters international merchandising channels. The Council uses this information to roll-out events all over the world to create export business from more than 370 buyers interested in the state of U.S. corn, and sorghum. This quality report enables buyers to make well-informed decisions and have confidence in the capacity and reliability of the U.S. corn market. The council has additional events schedule this month where they will present this good news to buyers in Mexico, Colombia, Taiwan, Japan, South Korea, North Africa and the Middle East. Below are the facts you need to know about the 2018 corn crop quality.

High Grade for U.S. Corn – The report showed 93.9% of tested U.S. corn samples rated at U.S. Grade No. 2 or better; this was largely the result of a warm, wet vegetative period and a moderate pollination and grain-filling period. The drier, moderate temperatures during the second half of the growing season promoted healthy plants, good test weights and low kernel damage.

Moisture – Over eight years average U.S. Aggregate moisture has ranged from a low of 15.3% in the 2012 drought year to a high of 17.3% in 2013. In 2018, the average U.S. Aggregate moisture content recorded at the elevator was 16.0%, which was lower than 2017 (16.6%), 2016 (16.1%) and the 5YA (16.5%).

Test Weight – Average test weight of 58.4 pounds per bushel was higher than the five-year average of 58.1 and indicates good kernel filling and maturation. Average U.S. Aggregate test weight in 2018 (58.4 lb/bu) was the same as 2017 (58.4 lb/bu), but higher than 2016 (58.3 lb/bu). Average 100 kernel weight of 35.07 grams was lower than 2017, but above the five year average.

Protein – Average U.S. Aggregate protein concentration in 2018 averaged 8.5%, lower than 2017 and 2016 (both 8.6%), but same as the 5YA (8.5%).

Starch – Average U.S. Aggregate starch concentration in 2018 (72.5%) was similar to 2017 (72.3%) and 2016 (72.5%) but lower than the 5YA (73.1%). Pollination (silking stage) occurred two weeks earlier than average, setting grain fill in the heat of the summer, decreasing relative starch accumulation.

Aflatoxin – All but one sample, or 99.5% of samples, tested below the U.S. Food and Drug Administration action level for aflatoxin (20 parts per billion).

Vomitoxin – One-hundred percent of the samples tested below the FDA advisory level for deoxynivalenol (DON), or vomitoxin, for chicken, cattle, hogs and other animals.

Total Damage – Average U.S. Aggregate total damage in 2018 (1.5%) was higher than in 2017 (1.3%), lower than 2016 (2.6%) but similar to the 5YA (1.6%). The 2018 total damage average was well below the limit for U.S. No. 1 grade (3.0%).


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