Morning Commentary

Sept corn down 3 ½ at $4.135

Aug beans down 4 ½ at $8.8125

The DOW is down

USD is stronger

Crude oil up $.39 at $57.26

Good morning,

Corn  bulls continue to pause and perhaps some even backpedaling a bit as weather becomes more cooperative and the trade starts to talk about a more stable crop. The USDA raised their weekly crop condition estimate from 57% to 58% now rated “Good-to-Excellent.” Indiana, Missouri, and Ohio conditions continue to deteriorate with all three states showing 36% or less of their total crop rated “Good-to-Excellent”. Wisconsin shows just 43% of its crop in GD/EX condition. Illinois shows just 44% of their crop GD/EX vs 73% last year. There seems to be some mixed opinions about Minnesota. The USDA shows just 56% of the crop rated GD/EX vs. 80% last year. The top producing state of Iowa has improved a bit to 65% rated GD/EX vs. 77% last year. The state of Nebraska is actually a bit better than last year at 75% rated GD/EX. I’ve heard a few more private crop tour yield estimates coming in between 160 and 165 bushels per acre. Most seem to be talking harvested acres somewhere between 77.0 and 80.5 million, with a total U.S. crop somewhere between 12.2 and 13.2 billion bushels.

Soybean  traders seem comfortable with prices orbiting around the $9.00 level. Bears continue to argue burdensome U.S. supply, more acres actually being planted than previously thought, and the ongoing lack trade dispute with the Chinese. The USDA elected to leave their weekly soybean condition estimate “unchanged” at 54% rated “Good-to-Excellent”. Again, Indiana and Ohio appear to be struggling the most with Indiana’s crop rated at just 36% GD/EX and Ohio’s at 30%. Missouri and Michigan are rated at just 41% GD/EX. Illinois is rated 44% GD/EX vs. 69% last year. Arkansas is rated 56% vs. 62% last year. Iowa is rated 62% vs. 74% last year.

The cattle feeder managed to trade cattle approximately 1.00/CWT higher this past week on slightly lighter volumes. The national average steer brought 113.91/CWT live and 183.32/CWT on a dressed basis. Total volumes were around 90,000 head versus 96,000 head last week and 148,000 head last year. Interestingly, NE is trading much lighter volumes of cattle currently compared to what we might expect from a historical standpoint. The lighter northern numbers are likely a function of several fundamental factors. First, the cattle that would be market ready would generally have been placed when northern yards were still struggling with winter and less than ideal pen conditions. Second, the strong basis has certainly kept all feeding regions more current than less. Third and last, NE is seasonally trading larger volumes through formula and grid marketing methods. We are at or near the largest grid volumes since the summer of 2017 and the largest formula numbers since last summer. Weekly slaughter totals continue to impress. Last weeks combined fed and non-fed harvest was estimated to be 651,000 head, which would be 105.5% of the 10 year average. Cattle on show lists for this week were higher in all regions and heat across portions of the central and southern areas will potentially compel feeders to keep cattle moving. The cattle markets have certainly been range-bound and quiet for nearing two weeks. Daily futures volumes are on the lighter side and fresh infusions of news are all but absent. The broad technical setup for LC futures is viewed as supportive as we remain in an uptrend and above the pivotal 50 day average. Shorter term, we can certainly see some sign of exhaustion and today’s (7.29) break would likely be a result of the overbought setup and rejection of the upper Bollinger band. Trey Warnock – Amarillo Brokerage Company

Surging pork imports are expected to send China’s pork and hog prices up to record territory by fourth quarter according to Chenjun Pan, senior analysts for animal protein at Rabobank. From what I understand, Pan forecasts China will import 3 MMT of pork in 2019, which is more than triple 2018’s 1.19 MMT. It’s worth mentioning, in the first half of the year, China brought in 818,703 MT of the meat, meaning, it’s likely we’ll see a surge in pork in the second half of the year.

GMO’s Being Considered for Organic: Organic certification currently requires products with the organic label that lack antibiotics, artificial colors, genetically modified ingredients, and synthetic pesticides. GMOs made the list because they aren’t naturally occurring, a value which is at the root of the organic movement. However, USDA Undersecretary of Agriculture Greg Ibach testified before the House Agriculture Subcommittee this month that plants grown with the aid of genetically modified organisms and gene editing could be allowed to be certified organic in the future.  The debate is heavy on the subject as some studies show as many as 50% of people say they wouldn’t eat GMO organically grown food.


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