News

Morning Commentary

July corn down 3 ¼ at $3.6325

July beans up 1 at $8.3175

The DOW is down

USD is weaker

Crude oil up $.37 at $61.77

Good morning,

Corn bulls continue to point towards more problematic weather delays. Massive rains have fallen over portions of Kansas, Illinois, Indiana, Iowa, and Missouri and there’s now more in the forecast. Traders are also talking about the extended two-week forecast becoming more troublesome as additional rainfall estimates are added. Bears on the other hand continue to believe they will see more burdensome balance sheet numbers from the USDA on Friday. Most sources are looking for another slight reduction in total demand and probably not much of a change in total estimated production. Bottom-line, no matter how you want to slice it, most sources are still looking for +2.0 billion bushels in ending stocks. The trend is negative.  A failure to hold 343.5 implies a probe below the 2018 low at 329.75.  Stable action over 366-9.5 is needed to provide fresh upside targets.  90-day ATM corn vol continues to firm, settling at the highest level since early August.

Soybean traders have all eye on Chinese trade headlines. Bears are saying USDA soybean ending stocks could push north of +1.0 billion bushels. Remember, only twice in the past five decades has U.S. soybean ending stocks been higher. Bulls are saying weather hiccups could continue to curtail acres and perhaps pull ending stocks sub-800 million. There’s also talk that recently released data is showing China’s soybean imports in April jumped +10% compared to last year, 6.9 MMTs last year vs. 7.64 MMTs this year. It’s also up big compared to the 4.92 MMTs imported in March. The trend is negative.  Sustained action below 800 signals a drop to 766.25.  Stable action over 853 is the minimum needed to provide upside targets.

Who Wants The Soybean Checkoff To Continue? As required every five years, the USDA will collect until May 31 any requests for a referendum on the continuation of the soybean checkoff; if 10% of soybean growers make a request, there will be a vote by producers. The national program is meant to expand uses for soybeans and soybean products in domestic and foreign markets and is financed by a mandatory assessment of 0.5% of the net market price of soybeans. (Source: USDA)

Purdue Ag Economy Barometer Plummeted in April: Declining by 18-points, the Ag Economy Barometer fell to 115 compared to March when the sentiment index stood at 133, making the decline in the index the fourth largest one-month fall in the barometer since data collection began in October 2015. The barometer’s decline was driven by worsening perceptions of both current economic conditions and weaker expectations for the future as the Index of Current Conditions fell 21 points to a reading of 99 while the Index of Future Expectations declined 16 points to a reading of 123. This translated to a significant drop in the percentage of producers who view now as a good time to make large investments, with that percentage sliding from 26% in March to 22% in April. (Source: ag.purdue.edu)

Researchers at Worcester Polytechnic Institute (WPI) in Massachusetts have made a breakthrough in the production process of biofuel, claiming their method for producing biofuels is not only more economical and efficient, but also more environmentally friendly than any ever before. In fact, analysts from the WPI team say that their new method is capable of producing biofuel with five times less energy than traditional manufacturing methods. I should mention that in a paper published in the environmental science journal Nature Communications, titled “Engineered Microbial Biofuel Production and Recovery Under Supercritical Carbon Dioxide” the WPI researchers detail the specifics of their discovery and its potential to produce isobutanol greenly and cheaply. Simply put, isobutanol — which can be produced out of cornstarch, cellulosic materials, agricultural residues and other ethanol feedstocks — is an alcohol that acts like a hydrocarbon. The four-carbon molecule can be shipped in existing pipelines and blended with a variety of fossil fuel-based materials to produce greener versions of jet fuel, rubber, polyethylene or diesel. In the past Isobutanol has cost more than ethanol, even though it supplied more power. Up until now, the positives have not yet outweighed the negatives, so an Isobutanol-blended gasoline could not be cost competitive with ethanol-blended gasoline. Without going to deep, I understand that their process uses supercritical carbon dioxide as a solvent along with a bacterium genetically modified to be able to withstand the harsh environment created by this antimicrobial liquid. This breakthrough bacterium is a CO2-tolerant strain of Bacillus megaterium, which the WPI team has successfully domesticated and engineered. I should mention that the novel process discovered by the team at WPI can be used to produce biofuels such as isobutanol without needing to turn to biotechnology, a more standard process which can be prohibitively expensive. With the breakthrough, produced isobutanol could then potentially be used as an additive to traditional gasoline or even act as a standalone fuel in its own right. Though we are still a ways off in the process of mass production, the magnitude of the team’s breakthrough should not be underestimated. According to team members, who used 30 years’ worth of scientific experience to build this process, “just having an organism that can grow in supercritical carbon dioxide isn’t much of a splash but producing isobutanol and being able to siphon it off at the right rate – all together that’s a big, big splash.” Hopefully this discovery will open more markets for current agricultural production one day, and if what I’ve heard is true, ethanol plants can be retrofitted rather inexpensively if need be. Definitely something to keep our eye on. (Source: oilprice.com, Nature)

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