Morning Commentary

May corn down ¼ at $3.5875

May beans down ½ at $8.875

The DOW is up

USD is weaker

Crude oil up $.32 at $64.37

Good morning,

Corn prices are steady this morning and continue to trade near contract lows. Bears are pointing to a slightly improved and drier longer-term U.S. weather forecasts and somewhat debatable comments surrounding Chinese trade. Bears point to the fact U.S. producers only had 17% of the entire U.S. corn crop planted last year by the end of April, with 0% reported as planted in Minnesota, North Dakota and South Dakota. In fact, many big production states like Iowa, Illinois, Indiana, Kansas, Nebraska, and Ohio were all running well behind their traditional pace at the end of April last year.

Soybean prices are steady this morning after yesterday taking steps towards the lower end of the multi-month trading range. The new-crop NOV19 contract is looking at nearby technical support at $9.18 per bushel. If we look further back on the time horizon, the NOV19 contracted posted a low of $8.98 back on November 1. A bit further back, more like mid-September, the contract posted a low of $8.79^2. Then in mid-July of last year a contract low of $8.64^6 per bushel was posted. These are the support numbers that keep the bears believing there’s more meat on the bone to the downside. Without an official Chinese trade deal, continued headlines and uncertainty surrounding African Swine Fever, very little risk left in the South American crop, and nearly 900 million in U.S. ending stock, it’s not real difficult to convince the bears there’s more meat on the bone to the downside.

At the moment, it appears that China will likely not only lift its ban on U.S. poultry, but also buy more pork from the United States to meet a rising supply deficit, two sources with knowledge of the negotiations recently told Reuters. I should mention that China continues to resist a U.S. push for it to lift its restriction on the drug ractopamine that is used by U.S. hog producers to boost growth. It’s worth noting that, keeping the ban in place benefits companies like Smithfield Foods, a subsidiary of Hong Kong’s WH Group Ltd., that raises most of its hogs without the drug.

Ag Economists are watching how land values hold up in 2019 as other economic challenges continue to cloud this year’s ag outlook. The Federal Reserve Bank of Kansas City last week said there’s potential for lower farmland values moving forward citing an increase in the number of land sales in some states and a shrinking gap between farm profits and interest rates. Understand, land prices have remained strong in parts of the country, but the growing financial stress could lead more farmers to sell land and drive down prices.

Delays in China’s approval process for biotech crops has cost U.S. companies about $5 billion. According to experts, some biotech products are waiting more than six years for approval in China and without any scientific basis for these lengthy delays. Industry groups and U.S. lawmakers have been urging the Trump administration to press China to make its regulatory process for approving agricultural biotech products more transparent and timely. (Source: CNBC)


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