Morning Commentary

March corn up 1 ½ at $3.78

March beans up 1 ¾ at $9.15

The DOW is down

USD is weaker

Crude oil up $.15 at $52.79

Good morning,

Corn traders are extremely eager to see today’s USDA reports. There’s really no reason to waste time and or talk about anything else. The biggest question looming are… How big of a reduction will the USDA make to old-crop average yield? How many acres will go unharvested? Will there be a reduction in their U.S. export estimate? How much further will they reduce their corn used for ethanol forecast? Will corn used for feed be lowered because of more alternative backing up in the pipeline? Will there be any change to South American production? Will the Ukraine corn production estimate be raised higher? The short term trend is neutral-slightly positive.  The market remains in position to test the mid-upper 380 area.  Closing under 375.5 would undermine the outlook.  Short, system types will find buy stops above 381.5.  Options are implying a 372.25-384.25 trading range today.

Soybean traders are not only battling uncertainties surrounding Chinese trade, but also uncertainty surrounding todays USDA data dump. The market backpedaled yesterday on rumors that President Trump would not be meeting with Chinese President Xi anytime soon. To paraphrase, a senior leader in Washington said, there was still a lot of work that needed to be done and hurdles cleared before the two leaders get together. They don’t see that happening anytime soon. President Trump also confided similar sentiment. The big question, is this simply more political jockeying ahead of next weeks meeting with U.S. trade representatives or are we really talking about a significant delay in finding a trade compromise? Here at home today, it’s all about the USDA reports. How far will they lower U.S. old-crop yield? How many harvested acres will be taken out of the equation? How will they interpret Chinese demand and the current trade conflict? Will they aggressively lower U.S. exports and or Chinese imports? How big of reduction will be made to South American soybean production? The short term trend is slightly-positive.  A close over 923.25 provides a target around 931.25.  We need a close under 906.5 to undermine the outlook.  Given a sell signal Thursday, system types will find buy stops above 931.25.   Options are implying an 904-925.5 trading range today.

The largest U.S. meat processor — Tyson Foods — missed Wall Street estimates for first-quarter revenue as the company was hit by lower average prices of pork, denting its sales. Sales in the company’s pork business fell 8.1% as prices fell on average 4.6% compared to last year. Analysts point to China’s retaliatory tariffs of more than 60% on pork having resulted in oversupplies of hogs in the U.S. as fewer producers ship them for Chinese consumption. (Source: Reuters)

Current tariffs make direct transfers of U.S. ethanol to China unprofitable, but the fuel can enter China tariff-free if it arrives with a blend of at least 40% Asian-produced material, according to trade rules established by the regional economic and political body, the Association of Southeast Asian Nations. The trip for U.S. ethanol-to China now takes about two months and includes a ship-to-ship transfer and a stop in Malaysia before it arrives. The journey reflects a broader shift in global ethanol flows since the trade war with China begun last spring. Remember, China slapped retaliatory tariffs up to 70% on U.S. ethanol. (Source: Reuters)


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