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Morning Commentary

May corn up 2 ½ at $3.64

May beans up 2 ½ at $9.025

The DOW is up

USD is weaker

Crude oil up $.07 at $62.65

Good morning,

Corn prices seem comfortable consolidating ahead of another round of Chinese trade negotiations. Bears are still pointing to the possibility of Washington closing the Mexico border and the backdraft it could cause on U.S. agricultural exports. Bears are also noticing that South American crop estimates seem to be ticking higher. The USDA currently has the Argentine crop estimated at 46 MMTs, there’s more talk circulating that the number will need to be bumped higher by perhaps +2 to +4 MMTs. Keep in mind, last year Argentine producers harvested just 32.0 MMTs.

Ethanol has been shown to have “significant greenhouse gas benefits” compared with gasoline, according to a new study released yesterday.  The study showed greenhouse gas emissions from corn-based ethanol are about 39% lower than gasoline and that when refined at natural gas-powered refineries, greenhouse gas emissions are around 43% lower than those for gasoline.

Soybean bulls are eager to hear headlines involving Chinese trade negotiations. I’m hearing the same as everyone else, talks are progressing and we appear to be headed towards some type of compromise. The big questions remain the same, when will an official deal be inked and what will be inside the details? With China being the worlds #1 buyer of soybeans and by far our biggest U.S. customer, these are extremely important unknowns. Bulls are happy to see the USDA attache in China increasing their soybean import estimate from 88.0 MMTs in 2018/19 to 91.5 MMTs for the 2019/20 marketing year. Bears point to the fact it’s still below the 94.1 MMTs China imported in 2017/18. Bears are also pointing to stiff competition coming out of Brazil as crop estimates are inching higher and the price landed to China is more competitive than U.S. suppliers. From a technical perspective, the NOV19 contract has strong resistance in the $9.45 to $9.55 area. Nearby support in the NOV19 contract is at or around last weeks low at $9.18. More major support would be the low set at the end of October at $8.97^4.

The up-and-coming ag technology company, Indigo Ag, identified 832 on-farm storage bins within flooded Midwest areas. They hold an estimated 5 million to 10 million bushels of corn and soybeans – worth between $17.3 million to $34.6 million — that could have been damaged in the floods. (Source: Reuters)

 

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