Morning Commentary

March corn down 1 at $3.7325

March beans down 2 ¾ at $9.1175

The DOW is up

USD is stronger

Crude oil down $.43 at $52.29

Good morning,

Corn prices retreated a bit last week on improved weather in South America and no sign of a trade deal yet with the Chinese. In somewhat of a surprise move, the USDA raised its Argentine corn crop estimate from 42.5 to 46.0 MMTs. It seemed like going into the report, the trade was looking for a -1 or +1 adjustment in the Argentine estimate. The +3.5 adjustment to the Argentine crop was a bit stronger than many anticipated. Here at home, the USDA lowered their average yield estimate more than expected from 178.9 down to 176.4 bushels per acre. Keep in mind this is still the second best ever harvested. Because of the reduction in yield and total harvested acres, total U.S. production was lowered by -206 million bushels. On the demand side of the equation, total U.S. demand was lowered by -165 million bushels. Ethanol lowered by -25 million bushels. Other Feed, Seed & Industrial use was lowered by -15 million bushels with lower projections for high fructose corn syrup and glucose and dextrose. Exports were left “unchanged”. Feed & Residual was actually lowered by -125 million bushels. Imports lowered -5 million bushels. In summary, U.S. ending stocks were lowered by -46 million bushels to 1.735 billion. U.S. average on farm price was lowered to between $3.35 and $3.85 per bushel. The short term trend is neutral- negative.  Friday’s close below 375.5 leaves the market vulnerable to a drop to 368.25.  Closing over 381.5 would undermine the outlook.  Whipsawed Friday after the report, short system types will find buy stops around 381.75.  Options are implying a 368-379 trading range this week. 

Soybean   traders are keeping a very close eye on U.S. and Chinese trade negotiations that begin again today in Beijing. The market seems a bit nervous and uncertain by the recent comments out of Washington. Is it just political jockeying or is a trade compromise moving further out on the time horizon? The USDA elected to lower their Argentine soybean production estimate slightly from 55.5 to 55.0 MMTs. Brazil’s soybean production estimate was lowered from 122.0 MMTs down to 117.0 MMTs. The USDA also lowered the export estimates for Brazil, Uruguay, and Paraguay, which was partly offset by higher exports by Argentina. Global imports are also reduced mainly on a 2-million-ton reduction for China due to lower crush demand. Here at home, the USDA elected to lower the average yield estimate from 52.1 down to 51.6 bushels per acre; Harvested acres were lowered from 88.3 down to 88.1 million acres. Total Production was lowered from 4.600 down to 4.544 billion bushels. On the demand side of the equation, domestic crush was raised higher by +10 million bushels. U.S. exports were lowered by -25 million bushels. Residual was lowered by -1 million bushels. U.S. imports were lowered by -5 million bushels. Net-Net, U.S. ending stocks were lowered by -45 million bushels, but still remain extremely burdensome at 910 million bushels. The short term trend is slightly-positive.  A close over 922.25 provides a target around 931.25.  We need a close under 905.25 to undermine the outlook.  Short, system types will find buy stops above 931.25.   Options are implying an 899-928 trading range this week.

November saw a record amount of beef exported from the U.S. as well as an increase of +2.2% from a year ago. Between January and November, beef shipments totaled almost 2.9 billion pounds, up 11.3% from the same range in 2017.  U.S. beef exports to the top four customers in November were up from year-earlier levels. However, shipments to the fifth largest buyer, Hong Kong, dropped 29.5% in November.

Many EV owners discovered in the past few weeks as winter storms slammed much of the country, the cold weather is not ideal. A new AAA stay found that when the thermometer drops to 20 degrees F, range fell by an average of 41% on the five models tested, including the Tesla Model 3, Chevy Bolt EV, Jaguar I-Pace, Nissan Leaf Plus, and the VW e-Golf. It’s definitely something all automakers are going to have to deal with as they push for further EV deployment as it’s something that could surprise and upset consumers. (Source: CNBC)

Beef Products Inc. BPI, the South Dakota-based meat processing company at the center of 2012’s “pink slime” controversy, just won a long-sought semantic victory. For years, the company has argued that its signature product is safe, wholesome, and not unlike everyday burger meat. Now, BPI has enlisted a powerful ally in its effort to recoup its image and reclassify its product: the federal government. After a months-long evaluation, the United States Department of Agriculture’s Food Safety and Inspection Service (FSIS) determined in December that BPI’s signature product—the offering famously called “pink slime” in an ABC News exposé—can be labeled “ground beef.” Legally speaking, it’s now no different from ordinary hamburger, and could even be sold directly to the public. FSIS calls it a “new” product because BPI’s process has evolved substantially since 2012—though how exactly it has changed is not immediately clear.


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