Morning Commentary

Sept corn up ¼ at $4.2425

Aug beans up 3 at $8.94

The DOW is up

USD is stronger

Crude oil up $.78 at $56.66

Good morning,

Corn  bulls are struggling to find fresh news. Weather seems to be cooperating in most areas. There are arguably some dry pockets in a few key locations that are being monitored but the market doesn’t seem overly concerned at the moment. There’s a small bit of optimism around renewed trade talks with the Chinese and rumors of a few soybean cargos being purchased off the PNW. Demand remains somewhat suspect as both ethanol and exports are in question. Ethanol stocks are up nearby double-digits compared too last year and margins are horrible. The short term trend for December corn is neutral-negative. Rallies capped at 439.5 leaves the market vulnerable to a drop to 420.5-418.25. Stable action over 449 is the minimum needed to provide fresh upside targets.

Soybean  bulls are pointing to what’s believed to be a handful of purchase by Chinese buyers off the PNW From what I understand, the cargo purchases were made by a combination of Chinese crushers and state owned buyers for October loadings. If these buys are actually confirmed, they will be the first Chinese purchases of U.S. soybeans in almost a year. The short term trend for November beans is neutral. Stable trade outside 890.25-920 is the minimum needed to provide fresh trending targets.

Cargill’s “BeefUp Sustainability” initiative will use 2017 as a baseline and will focus on the following four key areas: grazing management, feed production, innovation, and food waste reduction. From what I’m hearing, BeefUp Sustainability incorporates farmer and rancher feedback gathered through previous projects such as the Canadian Beef Sustainability Acceleration Pilot, on-site visits with key supply chain stakeholders and producer panels. It’s worth mentioning, U.S. farmers and ranchers already produce 18% of the world’s beef with only 8% of the world’s cattle, and according to a Food and Agriculture Organization of the United Nations finding, the North American beef supply chain is already more than 35% more efficient from a GHG perspective than the global average.

Japan is historically a top market for U.S. agricultural products, led by U.S. feed grains like corn and related items including distiller’s dried grains with solubles (DDGS), which is an ethanol co-product. Now, we can add another corn byproduct, ethyl tert-butyl ether (ETBE), which is made with U.S. corn-based ethanol. From what I understand, Japan has agreed to allow U.S. ethanol to meet up to 44% of a total estimated demand of 217 million gallons used to make ETBE or potentially 95.5 million gallons of U.S.-produced ethanol annually. I’m told, the first ETBE shipment from the United States, purchased by Japan Biofuels Supply LLP, unloaded at Chiba port near Tokyo and then Wakayama port near Osaka and consisted of 13.5 million gallons, representing 2 million bushels of corn demand.

U.S. organizations including the U.S. Grains Council, Growth Energy, and the Renewable Fuels Association have been working with Japan in recent years as they’ve not only promoted the global use of ethanol, but demonstrated with scientific information, the U.S. ethanol’s production processes and the changes to U.S. ethanol’s carbon intensity. It’s worth mentioning, Japan’s turn to ethanol-based products comes as an update of its existing sustainability policy, approved in 2010, in which only sugarcane-based ethanol was eligible for import and only allowed sugarcane-based ethanol for the production of ETBE. I’m told, the new policy calls for an increase in the carbon intensity reduction requirements of ethanol used as a feedstock to make ETBE meet a 55% reduction, which is up from 50%, and recognizes U.S. produced ethanol’s ability to meet that goal, even with the higher greenhouse gas (GHG) reduction standard.

Prospects for growth in the world’s third-largest economy look good. Though the population in Japan is declining, it remains a wealthy country of nearly 127 million people and is ranked as the 11th most populous country in the world. From what I understand, demographic trends indicate that by 2021, 98% of the population will reside in urban areas leading to more imports of U.S. agricultural products, and increasing the $12 billion agricultural trade deficit with the United States. Keep in mind, Japan earlier this year agreed on new terms and conditions that eliminate Japan’s longstanding restrictions on U.S. beef exports, paving the way for expanded sales to the United States’ top global beef market, and another $200 million dollar market to U.S. ranchers and producers. (Source:,


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