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Morning Commentary

March corn up 6 at $3.7675

March beans up 9 ½ at $9.12

The DOW is down

USD is stronger

Crude oil down $.19 at $56.97

Good morning,

Corn is rebounding a bit this morning on positive Chinese headlines and traders are eager to see what the USDA has to say about 2019 planted acreage. Reuters released a survey yesterday that is forecasting just over 91.5 million planted U.S. corn acres in 2019 vs 89.1 million planted acres in 2018. That’s almost a +2.5 million acre jump. That’s certainly more realistic than the +5 million acre jump in corn acres many analyst were forecasting a couple of months back. The short term trend is negative but momentum is turning up from an oversold state.  Closing over 377.5 would improve the outlook.  A close under 368.25 is bearish.  Short, system types will find buy stops around 377.5 in the day session.  With March options set to expire this week, vol is implying a 369.75-379.75 trading range through Friday.  The 380 put and 400 call have the largest open interest.  An underlying settlement Friday at 380 would result in max pain. 

Soybean traders are waiting to hear more headlines regarding Chinese trade negotiations, as well as the USDA’s early guess on 2019 acreage. The recent Reuters survey shows 86.1 million planted soybean acres in 2019 vs. 89.2 million in 2018. That’s essentially a -3.1 million acre reduction in U.S. soybeans. Unfortunately, without a major pickup in Chinese demand, the supply side reduction will do very little to reduce the current burdensome balance sheet. African swine fever (ASF) continues to create more concern inside the market. Just in the past couple of days, we’ve seen the disease detected on three farms in Vietnam, which marks the first confirmed cases of the highly contagious disease in the Southeast Asia country. The short term trend slightly negative but momentum is turning up from an oversold condition.  A close over 916.5 would signal a recovery phase.  A close under 891.5 is bearish.  Short, system types will find buy stops around 912 in the day session.   With March options set to expire this week, vol is implying a 895-914.5 trading range through Friday.  The 880 put and 980 call have the largest open interest while an underlying settlement Friday at 910 would cause max pain. 

The Chinese government announced they will expand their ag overhaul in a bid to bolster its rural economy and offset trade challenges. Reuters reports Beijing will promote increased soybean planting, accelerate its development of a new farm subsidy system and crack down on ag smuggling.

 

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