Morning Commentary

March corn down ¼ at $3.815

March beans up ¼ at $9.17

The DOW is  down

USD is stronger

Crude oil down $1.12 at $52.68

Good morning,

Corn continues to trade in a fairly narrow price range with very little fresh or new in the headlines. The MAR19 contract has essentially traded between $3.70 and $3.90 per bushel since late-September. Bulls are betting that something positive comes out of the upcoming Chinese trade negotiations. There’s also the hope that total production estimates for Brazil and Argentina are lowered. The earlier planted corn in Argentina is supposedly doing much better than the late planted. But I’m still hearing over +50% of their crop is considered to be in “Good-to-Excellent” condition. So probably not that big of an adjustment lower in Argentine production. There’s was also some talk that a few more acres went in the ground in some areas of Argentina experiencing good weather. As for Brazil, it’s all about second-crop production, which is now starting to be planted in many important locations. The short term trend is slightly positive.  The market is poised to test the mid-380 to low-390 area.  Closing under 375.5 would signal a challenge of the last swing low.  Long, system types will find sell stops around 373.

Soybean traders continue to debate U.S. exports. Bears argue that Brazil now has harvest well underway and their prices are starting to get cheaper than U.S. competitors. Bulls are still holding out hope that U.S. and Chinese leaders can agree on a large dose of U.S. agriculture heading that direction. Since last June this contract has basically traded between $8.40 and $9.40 per bushel. So as you can see we are currently trading near the higher end of the range. The NOV19 new-crop contract seems most comfortable between $9.25 and $9.75 per bushel. The highest its traded since mid-June has been $9.71. This past Friday we traded to almost $9.60, again we should recognize we are up near the higher end of the range for the past seven months. The short term trend is slightly positive.  A pop over 927.75 is constructive for the medium term outlook.  We need a close under 902.25 to prompt a drive to the last swing low.  Long, system types will find sell stops around 895.75.

China announced a new outbreak of African Swine Fever (ASF) in the northwestern region of Ningxia on Sunday, reported China’s agriculture ministry. This marks the 25th region or province to record an ASF outbreak in China. Currently there is no vaccine for ASF, although many countries are working to develop one, including China. According to Liz Wagstrom, chief veterinarian at the National Pork Producers Council, the quest for an ASF vaccine has been going on for a good 50 years. It’s no easy feat, because ASF is the largest virus known to man, she said. Because of its size, it’s difficult to discover which, if any, of those proteins has the antibody that would protect against clinical disease. According to Wagstrom, a vaccine for ASF is still several years away from being available to pork producers. Some U.S. sources say 10 years, while a European report says the vaccine is still 20 years out. Remember, China is the world’s top pork producer, accounting for half of global supply and with all its production consumed locally. (Source: FarmJournal’s Pork)

We continue to hear that Washington and Beijing are in talks to try and reopen U.S. poultry into China. If the talks are successful, U.S. meat giants like Sanderson Farms Inc., Pilgrim’s Pride Corp. and Tyson Foods Inc. could begin clawing back some of the business in China, a key market that represented hundreds of millions of dollars in annual sales before a ban was implemented in 2015 in response to an outbreak of avian flu in the U.S. China’s block on U.S. poultry has been costly for chicken companies. In 2017, U.S. meat companies shipped $1.3 million worth of chicken meat to Chinese buyers, compared with $248 million in 2014, according to USDA data. (Source: The Wall Street Journal)

DowDuPont’s ag unit, Corteva agriscience, is gearing up to broadly sell farmers in North American and Brazil a new type of genetically modified soybean for planting next year in a challenge to rival Bayer AG. Corteva revealed its plans for Enlist E3 soy seeds on Thursday, after top global soybean buyer China said last week it approved the crops for import. For years, Enlist E3 was on hold while waiting for the nod from Beijing. Corteva said Enlist E3 soybeans, which can resist three herbicides, will be offered in Brazil, Canada and the U.S. with some commercial sales to begin in 2019 and a full roll-out by 2020. (Source: Reuters)

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