Morning Commentary

Sept corn down 1 ½ at $4.17

Aug beans up ½ at $8.83

The DOW is up

USD is stronger

Crude oil up $.47 at $56.49

Good morning,

Corn  prices in the DEC19 contract have mostly traded in a 50 cent range the past 60-days between $4.20 and $4.70 per bushel. Bulls continue to talk about production problems associated with wide-spread planting complications. Bears continue to point towards demand uncertainties and ample domestic supply. Exports and ethanol remain highly uncertain based on current dynamics with Plymouth Ethanol in Merrill shutting down for the foreseeable future. If the trade count is correct, funds hold the smallest net long since early-June. 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.  Today is last trading day for August options. A September settlement at 430 results in the largest number of August options expiring worthless.

Next Round of Direct Payments to Farmers: The direct payments under the government’s Market Facilitation Program would be made in three tranches this summer, autumn and winter, said Robert Johansson, chief economist at the US Department of Agriculture. Unlike the first round of payments, which favored producers of soybeans and pork, the new program will pay crop farmers $15 to $150 an acre based on the estimated impacts of tariffs across their county. Reuters is saying the average county payment rate is about $69-per-acre county average in Illinois and a $66 average in Iowa. Payments in the South were stronger with a $95 per acre average in Alabama, and an $87 per acre average in Mississippi. Mr Johansson said this year’s program was designed to not incentivize overproduction of certain crops and to be compliant with World Trade Organization rules. The first round of direct payments was limited to $125,000 per farm operation, a cap the administration doubled to $250,000 in the new program. Farms with adjusted gross income of more than $900,000, disqualified under the first program, will be eligible this year if at least 75 per cent of their income derives from farming. (Source: Reuters; The Financial Times) 

Soybean  prices remain in a sideways channel trading comfortably between $8.90 and $9.50 per bushel since mid-June. Unfortunately, for bulls we are near the lower end of the range with improved U.S. weather conditions and still no confirmed Chinese purchases. In fact, we had net Chinese export cancelations in yesterday’s weekly USDA report. The trade count showed the fund selling 7,000 beans. They’re now thought to be short 73,200 lots. The short term trend for November beans is neutral. Stable trade outside 890.25-920 is the minimum needed to provide fresh trending targets. Today is last trading day for August options. A settlement at $9.00 results in the largest number of August options expiring worthless.


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