Morning Commentary

March corn unchanged at $3.7825

March beans down ¼ at $9.175

The DOW is down

USD is stronger

Crude oil down $.68 at $54.58

Good morning,

Corn traders are preparing for this weeks major USDA data dump. The biggest reports are scheduled for release this Friday, February 8th. Corn prices have moved very little in the past few weeks. The front-end of the trade, the MAR19 old-crop contract has basically traded between $3.70 and $3.90 since late-September. Outside of the normal headlines this week and the ongoing uncertainty still surrounding Chinese trade negotiations, we might also see a few more headlines regarding E-15. It seems like there’s been a bit more pressure being placed on the EPA to finalize the rules for year-round E15, especially as the industry struggle to compete with low-margins. Most inside sources are thinking the USDA will again need to reduce their corn used for ethanol estimate. There’s also some increasing debate about the USDA’s export estimate and if U.S. suppliers can meet the lofty expectations. The big question is will the reduction in U.S. old-crop yield and total production offset the reduction in total estimated demand? Don’t forget, despite weather worries, Argentina and Brazil are still looking at +20 to +25 MMTs more corn being produced in 2019. The short term trend is slightly positive.  The market remains in position to test the mid-upper 380 area.  The market continues to chop around weekly resistance at 380.  Closing under 375.5 would undermine the outlook.  Short, system types will find buy stops around 384.5.  Options are implying a 370-386.5 trading range this week.

Soybean prices continue to trade in a sideways channel near the upper end of their range. For what it’s worth, we haven’t seen the new-crop NOV19 contract close above $9.66 per bushel since mid-June of last year. There’s been some talk circulating the past few days that the Chinese have purchased another +2.0 MMTs, which is thought to be on top of the +5 MMTs they recently purchased. Most suspect the Chinese purchase around 10 MMTs before the window of opportunity closes. Keep in mind, President Trump has been holding to his March 1st deadline. It’s also important to recognize that the Chinese still have their 25% tariff in place on U.S. soybeans. .  The short term trend is positive.  A close over 925.75 provides targets at 937.25, perhaps the 941.  The 941 area will be key from a longer term perspective.  We need a close under 906.5 to undermine the outlook.  Given a buy signal Friday, system types will find sell stops around 913.25.   Options are implying an 899-936 trading range this week.

After China agreed to buy 5 million metric tons of U.S. soybeans, U.S. Ag Secretary Perdue announced the USDA is making available $200 million in funding to help ag organizations develop foreign markets for U.S. farm goods. This is the third branch of the trade relief program for farmers and ranchers burned by the U.S.-China trade war. Soybean farmers and exporters look to receive a large portion of that aid package. The American Soybean Association was the largest single recipient, taking in nearly $22 million, followed by the U.S. Meat Export Federation ($17.6 million) and the U.S. Grains Council ($14 million).(Source: USDA)

California ranks fifth in the nation in number of farms & ranches, with over 77,000 covering over 25 million acres. California is ranked first in the U.S. in the production of milk, butter, ice cream and nonfat dry milk. Over a third of the country’s vegetables and two-thirds of the country’s fruits & nuts are grown in California (Source: USDA)


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