Morning Commentary

July corn up 5 ½ at $4.2425

July beans up 5 ¾ at $8.7775

The DOW is up

USD is stronger

Crude oil up $.27 at $59.08

Good morning,

Corn bulls point to the slowest planting pace ever in modern U.S. history. This brings about a wave of unanswered questions and uncertainty about the crop and total U.S. production. Bears are hoping at some point bulls will have to stop to catch their breath, but the question is how far will prices fall if we start to back-and-fill a bit?

Soybean traders are debating if this market has also now been pulled into a full-blown weather market? Bulls are talking about flooded fields and complications from overly wet conditions negatively impacting acres and yield. Bears are pointing to slightly drier conditions in the forecast into mid-June and extremely strong genetics that have made recent crop years very resilient. Similar to corn, there’s just so many variables still up in the air. The market recognizes the fact it needed to add “risk-premium”, but how much this early in the season? How volatile and extreme will price discovery be as the trade tries to sort out all of the pieces? Technically, we are still trading below the 100 and 200-Day Moving Average. If we were able to muster enough upside momentum to close above these levels, somewhere between $9.00 and $9.10 in the JUL19 contract and between $9.20 and $9.25 in the NOV19 contract.

According to the World Organization for Animal Health (OIE) it will take years for china too notion the deadly Africa swine fever virus that has spread throughout the country, which is the world’s biggest pork producer. The situation will continue to evolve in Asia because there is significant contamination of the meat and meat products supply chain. These Asian countries are going to have to transform their farming systems into higher biosecurity systems and that will be an enormous challenge. (Source: OIE)\

Hoping to avoid the spread of African Swine Fever, South Korea has asked North Korea for a joint quarantine effort to keep the devastating disease out of the country. Though North Korea has not confirmed any cases of ASF, there are reports circulating that the virus is indeed spreading into the country. I should mention that USMEF data shows South Korea was the No. 4 buyer of U.S. pork in 2018; as well as a growth leader in U.S. beef imports.

Big agribusiness is taking another look at Quinoa, whose seeds are rich in protein, dietary fiber, B vitamins, and dietary minerals in amounts greater than many other grains, it’s also garnering a premium because it can be marketed as gluten-free. It’s worth mentioning however, Quinoa currently finds itself in an over-supplied market, as between 2009 and 2019, global production tripled from 75,000 to 230,000 metric tons, in return prices drastically fell as many talked of “peak quinoa”. But with it’s strong dietary benefits, quinoa has become a popular health food worldwide and gaining more demand type traction, with distributors in America and Europe thinking the glut is only temporary. For growers, opportunities are available as quinoa’s rare resilience to different conditions is allowing researchers to experiment with variants of the crop in diverse locations, perhaps turning quinoa into a potent agricultural product that can survive climate change and may soon demand greater premium. Keep in mind, the crop that originated in the cool, tropical mountains of the Andes is now being cultivated in a multitude of environments. For the last few years, its adoption as an ingredient in higher-margin processed food has been hampered by volatile prices and inconsistent production, meaning that current purchases of quinoa from thousands of Bolivian farms, where the majority is sourced from can contain half a dozen different varieties, which behave differently, making it hard to convert into reliable flour or snacks. Now, Ardent Mills, America’s biggest flour-maker, who wants to explore more adventurous opportunities with quinoa, find themselves looking for more dependable supply, and they are hoping to make that happen here in the United States. Seeking solutions to their problem, Ardent Mills launched a unit that works with breeders and food scientists to sponsor American growers, starting in its native Colorado and the Pacific north-west, as well as eyeing California. As Andean Naturals, a California based leading importer of quinoa, looks to source more from domestic growers, they are testing plots here in the states and by 2025, are hoping to convert a large number of rice acres to quinoa. Moving forward, I believe that opportunities and premiums may become available for quinoa, as new varieties allow production in areas once thought out of reach for many growers. I should also mention, the genome of quinoa was sequenced in 2017 by researchers at King Abdullah University of Science and Technology in Saudi Arabia, where they were able to modify genes to produce a higher crop yield, improved tolerance to heat and biotic stress, and greater sweetness. It may not be for everyone, but definitely worth further research for those looking for new opportunities. (Source: Economist, Wiki,


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