Morning Commentary

May corn down 2 ¼ at $3.63

May beans down 5 at $9.015

The DOW is up

USD is weaker

Crude oil up $.13 at $62.23

Good morning,

Corn  prices are down a bit this morning but bulls have slowly rallied prices this week on optimism surrounding Chinese trade and greater uncertainty regarding planted U.S. corn acres in 2019. We could also argue the perhaps a few bears have backpedaled a bit this week as well on similar headlines. There’s also more talk inside the trade that the USDA might make an adjustment lower to the U.S. export estimate in the coming months, especially if nothing official comes from Chinese trade negotiations. The bears also believe the USDA could make another small reduction in their corn used for ethanol estimate. Bulls are hoping the USDA  can offset some of that demand reduction by increase corn used for feed. The argument is that livestock numbers are and have been on the rise.

Soybean prices backpedal a bit this morning, giving back some of yesterday’s gains as President Trump insinuates a trade deal could still be a few more weeks away. Bulls we’re hoping to hear that President Trump and Chinese leader Xi were scheduling an official trade summit. Bears believe even with a Chinese trade deal, the window of opportunity is closing for U.S. exporters to be competitive in comparison to South America. With a record amount of U.S. supply, +900 million bushels, and talk inside the trade of increasing soybean acres compared to the most recent USDA estimate, the bears believe they can somewhat keep a lid on prices.

China Reports Another New African Swine Fever Outbreak: The outbreak was found on a group of 10 pig farms in the city of SHangri-Law with 301 hogs in total. The disease killed 105 of the animals. China has already reported more than 100 outbreaks of African swine fever since it was first detected last August. (Source: Reuters)

USDA Cutting Inspectors by 40%: The pork industry will soon have more oversight of its own production as the Trump administration plans to cut 40% of USDA inspectors at pork plants and replace them with plant employees. The new regulations — including more employee-led inspections and faster processing lines — have been in the works for more than a year and emerge after a 15-year federal pilot program instituted at five plants across the country. About 40 of the country’s 612 pork plants will soon start operating under the new system, impacting 90% of the pork produced in the U.S. (Source: Food Dive)

Are Diesel Prices Headed Higher? Senior Petroleum Analyst Dan McTeague thinks so as he points to increases in overall demand, combined with a slowdown in heavy oil production, the federal carbon tax, and the coming IMO 2020 regulations. The latter being the International Marine Organization’s reductions in sulfur content in all marine fuels from 3.5 per cent to 0.5% by January 1, 2020. “It’s the perfect trifecta of bad news,” McTeague said. The analyst suggested people also keep a watchful eye on the value of the Canadian dollar to the United States dollar. He said there has been some speculation that the loonie could plummet to 62 U.S. cents during the course of 2019. “If that’s the case, look for another 13-cent increase,” McTeague said of diesel prices. Phil Flynn of the Price Futures Group in Chicago said the lack of heavy oil has been taking its toll. Diesel prices in the U.S. are at their highest average so far in 2019 at US$3.08 per gallon, according to the U.S. Energy Information Administration. Flynn suggested an increase to US$3.20 per gallon is possible.


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