Morning Commentary

May corn down ¼ at $3.615

May beans up 1 ½ at $8.97

The DOW is up

USD is stronger

Crude oil up $.19 at $61.79

Good morning,

Corn bulls continue to point towards cool-wet weather in the forecast along with flooded fields. Despite what the USDA delivered as their acreage estimate, there’s still a ton of real-life uncertainty. As for demand, U.S. export sales remain strong. Obviously, new-crop production from South American and Ukraine will eventually create more of a headwind, but as for now U.S. exports are strong. Ethanol margins have improved and we are seeing continued strength in crude oil prices which is a positive. Unfortunately, heavy rains and flooding have created more nearby obstacles in the ethanol space. The most recent data shows total corn used for alcohol and other uses in February down roughly -9% drop vs. January and down roughly -7% vs. February 2018. Corn for ethanol was actually down just over -9% vs. January and down just over -7% vs. February of last year.

Soybean bulls are pointing to the USDA estimate for fewer planted U.S. acres and a few more purchases from Chinese buyers. Bears point to South American competition in the export space growing and perhaps a few more holes being shot in total U.S. demand. There’s starting to be more talk that production estimates in both Argentina and Brazil are improving and working their way higher. Here at home, not only will exports be facing stiff competition in the days and weeks ahead, but there’s also some questions being asked about U.S. domestic crush. The latest data showed U.S. soy crush in February down sizably compared to January and not as strong as many inside the trade were anticipating. U.S. processors crushed roughly 163 million bushels of soybeans in February, which was down about -11% vs. January and less than what most in the trade where anticipating.

Lawmakers and state officials have recently pointed out that there’s no insurance for Midwestern farmers’ stored grains that were swamped by the recent flooding in states like Iowa and Nebraska. USDA economist Ashley Hungerford spoke recently about encouraging crop diversification nd covering excess production as the next steps needed to help growers deal with increasingly common catastrophic weather. She did note, however, that she does not believe this is something USDA needs to fund by itself. (Source: Politico)


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