Morning Commentary

May corn up ½ at $3.5175

May beans up 1 ¼ at $8.6325

The DOW is up

USD is stronger

Crude oil up $.03 at $66.33

Good morning,

Corn has tumbled to fresh new contract lows as funds continue to expand their record short position. The South America crop is significantly larger than last year, the U.S. dollar has pushed to fresh new multi-month highs, and very few forecasters here in the U.S. are seeing many longer-term complications. Soil moisture is more than adequate in major product areas and most sources believe there’s still plenty of time to get the crop in the ground. Bulls continue to argue more “preventive plant” acres, an entire growing season of “unknowns” ahead, a few hiccups being monitored in Ukraine, and the ongoing possibility of China perhaps stepping in as a significant buyer of U.S. corn, ethanol and DDGs. I’m most concerned that the funds can stay short for an extended period of time. Often much longer than most seasoned traders believe possible or rational.

Soybean prices are now down more than -75 cents from their February highs, trading down to a fresh 9-month low in the NOV19 contract. Both the JUL19 and NOV19 contracts are now less than -30 cents away from their all-time contract lows. Reports circulating yesterday, showed more talk of Chinese soybean demand falling below the current USDA estimate as African Swine Fever creates more substantial headwinds.

Chinese soybean imports could be lower than expected this year, as an outbreak of African swine fever continues roiling the country’s pork industry. At least 1 million hogs have b been culled, and China’s Ag Ministry says more than 80% of hog farmers aren’t planning to restock their herds. This could mean less demand for soybeans. Hearing that China’s soybean imports could drop to 85 million metric tons, down from USDA’s forecast of 88 million metric tons for the current marketing year ending in September. (Source: Bloomberg)

Cargill To Invest $112 Million to Expand China Corn Facility: The grain trader announced they would invest $112 million to expand capacity at its corn processing facility in China’s northeastern province of Jilin. This is part of a bigger project being jointly built with the local government called the Sino-U.S. Cargill Biotech Industrial Park. The park aims to have an annual corn processing capacity of up to 2 million tonnes by 2020. According to Cargill chairman and chief executive Dave MacLenna, the company hopes to double its investment in China over the next five years. (source: Reuters)


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