Morning Commentary

March corn up 2 ¼ at $3.795

March beans up 2 ½ at $9.215

The DOW is up

USD is stronger

Crude oil up $.53 at $53.84

Good morning,

Corn  price struggles to find direction and continues to chop around. Bears argue that dry conditions in parts of Brazil have improved a bit as of late and more rains have been added to the forecast. The 800-pound gorilla in the room remains Chinese trade negotiations. Another round of talks is starting today, perhaps we will know more by the end of the week. Traders also seem hesitant to jump in front of a wave of USDA data that is scheduled to be updated and released between now and February 8th, which is only seven short trading days away.

Soybean  traders continue to take a “wait-and-see” approach. All eyes are on the two-day meeting which starts today in Washington. China is sending one of their top trade negotiators in Vice Premier Liu He, while U.S. Trade Representative Robert Lighthizer will lead trade discussions for the home team. Four other officials rounding out the U.S. delegation will include: Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, National Economic Council Director Larry Kudlow, and trade advisor Peter Navarro. This leadership team for the U.S. will be accompanied by senior officials from the White House, USTR, and the Departments of Agriculture, Commerce, State, and the Treasury. The group is trying to get China to agree to many structural changes that will make trade more fair for both nations. The two sides will also discuss China’s pledge to purchase a substantial amount of goods and services from the U.S. i.e. energy and agriculture. Before we get overly optimistic, let’s not forget, Chinese representatives met with the World Trade Organization on Monday, to begin the process of legally challenging U.S. tariffs on Chinese exports. China said the U.S. tariffs are “a blatant breach” of WTO policy. A U.S. representative at the meeting said China’s claim was “unfounded” and countered that it is China to blame for “threatening the overall viability of the WTO system.”

According to new research in the American Journal of Agricultural Economics, U.S. production of corn ethanol has doubled since 2008 and corn prices spiked from 2008 to 2012. However, all of that had little impact on total cropland area changes. The study found that the increase in ethanol capacity alone led to a modest 3% increase in corn acreage and less than a 1% increase in total crop acreage by 2012 when compared to 2008. The effect of corn price and aggregate crop price on acreage change from 2008 to 2012 was more than twice larger than that of effective ethanol production capacity over this period. (Source: Ag & Applied Economics Association)

Some 38.6 million Americans were enrolled in SNAP at latest count, down by one-fifth from the peak of 47.6 million during fiscal 2013 and the slow recovery form the Great Recession. Enrollment will drop further, to 32 million people, during the coming decade, estimated the CBO in its budget outlook on Monday. (Source: CBO)


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