Morning Commentary

May corn up 3 ½ at $3.765

May beans up 6 at $9.175

The DOW is up

USD is stronger

Crude oil up $.70 at $56.50

Good morning,

Corn bulls are trying to recover the -11 cents lost last week. The market is now sitting at 5-month lows and may have some heavy lifting ahead. Bulls are happy to hear that President Trump has officially asked China to drop all current tariffs on U.S. agriculture. Bears continue to doubt that a Chinese trade deal will happen, and if it does, they are doubtful it will bring about significant buying of U.S. corn. Bears also see the Argentine and Brazil crop getting a bit larger not smaller.  U.S. planted corn acres for 2019 will be under debate the next several weeks as many important production areas battle overly-wet conditions and limited field work. Technically, the MAY19 contract is hoping to hold major support at $3.63^2, which is the low established back in mid-September. A close below this level would be considered a game-changer for the bulls still remaining in the market. I wouldn’t be surprised to see the bears re-test that level, perhaps even press to new lows before making a bullish run this spring or early-summer. Our highs last year were posted towards the end of May. Heavy upside resistance in old-crop still seems to be in the $3.90 to $4.00 range.

Soybean traders continue to debate Chinese trade and overall demand. Not only are there a ton of unanswered questions about trade negotiations but there’s huge uncertainty surrounding African Swine Fever. President Trump has officially asked China to remove tariffs on U.S. soybeans, which would help add credibility to the bulls longer-term hopes. Removal of the tariffs could also allow China to purchase U.S. soybeans and ship directly to Chinese crushers. The market is heavily debating when the Chinese will purchase the second agreed upon 10 MMTs. Most seem to be in agreement that the first round of 10 MMTs has been purchased. Bears point to the fact, regardless, last year China had already made commitments for 27 MMTs of U.S. soybeans. There’s also the continued debate about Chinese crush demand considering the continued spread of African Swine Fever. How much will demand be reduced as the hog population is trimmed trying to contain the difficult disease? There some who speculate total Chinese import demand could be trimmed by -7 to -12 MMTs just depending on how the virus is controlled. Technically, last week was the first time MAR19 soybeans closed below $9.00 in 2019. The MAY19 contract is holding support at $9.00 with nearby resistance up in the $9.30 to $9.40 range. The new-crop NOV19 contract seems to have more stable support on the charts between $9.00 and $9.20 per bushel. To the upside, we continue to see heavier resistance when the market trades up near $9.60 per bushel.

The World Trade Organization (WTO) ruled in favor of the U.S. last week in a long-running dispute over Chinese subsidies for wheat and rice farms. Reuters and The Associated Press report that the WTO ruled that China exceeded internationally agreed-upon standards for domestic support of rice and wheat farmers, allowing Chinese farmers to artificially deflate prices of wheat and rice around the globe. U.S. officials hailed the decision as a major victory for the Trump administration, though China can appeal the decision. (Source: The Hill)

For the first time in centuries, fur pelts are a hot global commodity again. John Hughes, a veteran fur buyer who deals fur from Montana, processes about 10k coyotes annually and usually pays fur trappers between $75 and $120 per pelt. Furriers then sell the purchased pelts to companies like Canada Goose, which, in turn, sell finished jackets across the globe for upwards of $1k. (Source: TheHustle)


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