Morning Commentary

Sept corn up 2 ½ at $4.09

Nov beans up 4 ½ at $8.7125

The DOW is up

USD is stronger

Crude oil up $1.31 at $52.40

Good morning,

Corn  traders are gearing up for Monday’s highly anticipated USDA report. Technically it looks like the market might be stuck in a trading range between $4.00 and $4.25 per bushel in the DEC19 contract until the updated data is released. Most in the trade are thinking the the USDA is going to lower their total production estimate from its current 13.875 billion bushels. How much lower is the magic question? The USDA is currently forecasting a 166 bushel per acre yield average, which is -10.4 bushels per acre lower than last year. The trade is thinking the yield estimate could be lowered even further down to 164.7 bushels per acre. Nevertheless, since June 27th, open interest has risen 92,700 lots while prices have fallen 37 cents. The average price during that timeframe is 430. The trade count showed the fund buying 6,500 corn yesterday. They’re now thought to be long 53,100 lots. The short term trend for December corn is neutral negative. A close under 397.25 signals a return to contract lows. Sustained action above 423 is the minimum needed to provide fresh upside targets. Following two days of flagging action, overnight strength suggests the market is attempting to build on Monday’s spike recovery.

Soybean  prices currently seem comfortable trading in the $8.50 to $8.75 range in the NOV19 contract. There’s still a ton of longer-term uncertainty surrounding Chinese trade, African Swine Fever and upcoming U.S. weather. Nearby however, all eyes are going to be on Monday’s USDA report. The USDA is currently forecasting an average yield of 48.5 bushels per acre vs. 51.6 last year. The trade seems to be thinking the USDA’s yield estimate will get lowered to 47.5 bushels per acre. Perhaps an even more uncertain question will be harvested acres? The USDA is currently forecasting 79.3 million harvested acres. Many inside the market are now thinking the harvested acreage number could move higher, perhaps closer to 80 million, on more late-planted acres. The short term trend for November beans is bearish. A close under 853.5 signals a fresh wave down. Stable action over 886 is the minimum needed to suggest renewed rally attempts. Following two days of flagging action, overnight strength suggests the market is attempting to build on Monday’s spike recovery.

Glencore PLC’s first-half earnings fell by a third and the commodities giant said it’s closing one of its largest copper and cobalt mines as concerns over the global economy and the trade war between the U.S. and China hit commodity prices. Glencore was expected to benefit from a revolution in electric vehicles as the metal is a key ingredient in the lithium-ion batteries that power them. But the demand for the biggest user of this metal such as laptops and tablets has waned, while supply has increased, leading to a 58% fall in cobalt’s price in the first half of 2019 compared with the same period last year.


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