Morning Commentary

May corn up ½ at $3.72

May beans up 1 at $9.07

The DOW is down

USD is stronger

Crude oil down $.32 at $59.91

Good morning,

Corn bulls continue to talk about extreme flooding and moisture in Nebraska, Iowa, Minnesota, and parts of Wisconsin, Missouri and the Dakota’s. Unfortunately, the corn market really doesn’t seem to care. In fact, prices have actually moved a bit lower this week. As for ethanol we’ve seen the headwinds, and the latest data released yesterday showed inventories jumping to a record 24.4 million gallons while weekly ethanol production fell to its fifth lowest level in the past year.

Soybean prices continue to trade in a fairly narrow range, the MAY19 contract trading essentially 15 cents either side of $9.00 for the past couple of weeks. The new-crop NOV19 contract still seems comfortable trading somewhere between the $9.20 and $9.60 range. Bears are talking about the latest comments from President Trump, where he mentioned that tariffs could stay in place for an extended period of time to help make sure the Chinese make good on their end of an agreed upon deal. Also keeping an lid on soybean prices are the continued negative headlines circulating about African Swine Fever. Comments were circulating inside the trade yesterday that hog feeding in China could now be down by more than -30%.

The catastrophic flooding that has drowned parts of the Corn Belt could costs upwards of $1 billion. There’s growing talk of Congress needing to take action. Ag Secretary Sonny Perdue said flood relief fund could be part of a broader disaster aid package working its way through Capitol Hill. According to the Nebraska Farm Bureau, the estimate damage form the severe weather could top $400 million in livestock losses and another $440 million for crop growers who could be forced to delay or cancel planting.

Oil prices rose yesterday, with U.S. crude topping $60 a barrel for the first time in about four months, after government data showed the American stockpiles of crude oil and refined fuels plunged last week. WTI has rallied 32% this year after losing nearly half of its value in the final months of 2018. Brent is also up more than 27% year to date, boosted by production cuts from OPEC and U.S. sanctions against Iran and Venezuela.

According to the latest from the USDA attache out of Canada, our neighbors to the North continue to be the number one export destination for U.S. ag products. In 2018, U.S. agricultural exports to Canada totaled $20.7 billion. U.S. exports of high-value food and beverage products to Canada ($16.1 billion) represented over 24% of total U.S. consumer oriented ag exports globally. These high-value exports support tens of thousands of jobs in the United States. In addition to large companies, many of the U.S. exporters are small and medium-sized businesses for which shipments to Canada represent their first export opportunity. In 2018, total two-way trade in agricultural goods with Canada reached nearly $44 billion. A testament to NAFTA’s importance for both countries, deeply integrated supply chains show more than $845 million in agricultural products crossed the U.S. – Canadian border each week. Over the last three decades, many argue the main reason for the strong increases in trade was the passage of the U.S.-Canada Free Trade Agreement in 1988, followed by the North American Free Trade Agreement (NAFTA) in 1994. These trade agreements helped to eliminate many tariffs that a were in play. Certainly there are still some big improvements that could be made and we are hoping that’s what comes from the ongoing trade negotiations and hard work both North American nations are putting into the new proposed USCMA agreement. Bottom-line, we do a lot of business with each other and leaders from both nations understand the importance of our relationship. (Source: USDA, FAS – Global Ag Trade System)


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