Morning Commentary

July corn up 5 ¾ at $3.7525

July beans up 5 at $8.405

The DOW is up

USD is stronger

Crude oil up $.85 at $62.87

Good morning,

Corn bulls are sharpening their horns, sensing they might soon have more bears on the run. Wet weather continues to be the driving force as U.S. planted acres remain in question. FYI, last year the USDA estimated 89.1 million corn acres where planted. This year the USDA is still using the early estimate of 92.8 million planted acres. Everyone wants to keep tippy-tapping and shaving a few acres here and there, yet still using a total acreage number above +90 million…

Soybean traders are battling it out. Bears are talking about China buying heavy doses of Brazilian soybeans, while bulls point towards U.S. shipments becoming more competitive. Many inside the trade say soybean planting is of little concern since there’s still a ton of time left on the game-clock.

The second package of aid for U.S. farmers hit by the trade war with China is expected to total $15 billion to $20 billion and involve direct payments, the agriculture secretary said on Wednesday. The U.S. Department of Agriculture is still finalizing the plan, which is likely to prioritize hog and soybean farmers, the products most affected by the trade dispute between China and the United States, Agriculture Secretary Sonny Perdue and industry sources briefed on the plan said. (Source: Reuters)

Chinese Meat Importers are Ramping up Purchases as the world’s top pork-consuming country struggles with a shortfall in pork production, due to a rapidly spreading hog disease. Joe Sanderson, CEO of US chicken giant Sanderson Farms, says the Mississippi company has had inquiries on poultry sales to China, and not just the leg-quarter portions that have historically been sold to China. Potential buyers have been asking about whole chicken legs, Sanderson says, indicating the depth of the country’s need to replace its lost pork production. For now, US chicken remains effectively shut out of China, pending a resolution to the US-China trade disputes, Sanderson says at a New York conference. (Source: DowJones Newswires; Jacob Bunge, Wall Street journal))

China’s sow herd fell by 22.3% in April from a year earlier, another record large drop. This plug in number of breeding pigs follows a 21% decline in March, which was at the time the largest ever recorded. The size of decline in breeding sows equates more or less to a similar size drop in production. Though Rabobank has warned pork production could decline up to 35%. Overall, the pig her fell 20.8% from a year earlier according to Chinese ag ministry. They did not, however, give total herd figures. (Source: Rabobank)

April Crush Down 10 Million Bushels From March: 160.0 million bushels of soybeans were crushed in April, down 1.6 million bushels from expectations of traders. I’m told even with the lower crush numbers in April, the USDA’s forecast of 2.1 billion bushels for the 2018-19 marketing year remains unchanged.

Ethanol Industry Needs Trade Wars Resolved to Expand Margins: According to Mike Dwyer, chief economist of the U.S. Grains Council, if it wasn’t for tariff protection, the U.S. would be supplying 90% of China’s import needs. Dywer believes that if the trade war ended tomorrow, the industry would reap an extra 10 cents per gallon. In his opinion, while domestic measures like the promised expansion of higher ethanol gasoline blends such as E15 help, trade issues need to be resolved for the industry to thrive.


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