Morning Commentary

Dec corn up 5 at $3.795

Nov beans up 6 ¼ at $8.7275

The DOW is up

USD is stronger

Crude oil down $.19 at $56.02

Good morning,

Corn  traders continue to debate yield and acres! The USDA lowered its weekly crop-condition estimate by -1% to 56% rated “Good-to-Excellent”. The USDA also estimates just 55% of the U.S. crop is in the “dough stage” vs. 83% last year at this time. The USDA also estimates just 15% of the crop is “dented” vs. the 5-year average of 30% by this date. Bottom-line, the crop is extremely late.  The Pro Farmer Crop Tour finished Day #1 with most tour participants talking about very immature crops and abandoned fields. There was also some talk about disease out on the Western leg of the tour. Eastern tour participants were talking about extremely immature crops with many fields just in the “milk stage”. There was also some talk of rootworm out east. The tour released results last night that estimates the Ohio yield at 154.35 bushels per acre vs. the current USDA estimate of 160 bushels per acre. Last year the USDA estimated Ohio’s yield at 187 bushels per acre vs. the Pro Farmer Crop Tour estimate last year for Ohio at 179.57 bushels per acre.  The Western leg of the tour estimates the South Dakota average yield at 154.08 bushels per acre vs. the current USDA estimate of 157 bushels per acre. Since June 17th, total open interest is down 122,000 lots while prices have shed 94 cents. The trade count showed the fund selling 9,500 corn yesterday. They’re now thought to be short 1,300 lots. If realized, funds have held a short position during the month of August for four straight years. In the previous three years, the US produced a large corn crop. The short term trend for December corn is bearish. Sustained action below 388 leaves the market poised for a test of contract lows (363.75). A close over 403.25 is the minimum needed to provide fresh upside targets.

Soybean  traders are heavily debating U.S. crop conditions. Similar to corn, the USDA lowered the crop-condition estimate by -1% to now show just 53% of the U.S. crop rated “Good-to-Excellent” vs. 65% this time last year. The USDA is also suggesting that over +7.5 million soybean acres are still yet to bloom, confirming that the crop is running way behind schedule. States running the furthest behind appear to be Michigan, Indiana, Ohio, Missouri, Kentucky, and South Dakota, all showing less than 60% of their crop “setting pods”. Illinois is showing just 67% setting pods vs. the historical average of 88% by this date. Iowa shows just 71% setting pods vs. the 89% average. As a whole, the USDA is estimating that just 68% of the U.S. crop is “setting pods” vs. the 85% average. The Pro Farmer Crop Tour on Day #1 also reported seeing a lot of immature fields. The Eastern leg of the tour showed Ohio pod counts at around 764 pods per 3×3’ square area vs. a pod count average of 1,248 last year, which puts this year’s pod count off by about -38% compared to last year. The average settlement price for Nov beans since August 13th is 876.75. With the trade count showing the fund having sold 6,000 beans yesterday, they’re now thought to be short 93,500 lots. Going back to 2006, funds are estimated to be holding their second largest short position during the month of August. The only year funds were shorter was the week of August 14, 2018. The short term trend for November beans is neutral-negative. Stable action outside 870.5-884.25 should provide fresh trending targets.

The U.S. Department of Agriculture (USDA) announced that producers of nearly 17,000 dairy operations have signed up for the Dairy Margin Coverage (DMC) program since signup opened June 17. Producers interested in 2019 coverage must sign up before Sept. 20, 2019. DMC offers protection to dairy producers when the difference between the all-milk price and the average feed cost (the margin) falls below a certain dollar amount selected by the producer. In June, when the DMC signup was announced, Secretary Perdue said, “For many smaller dairies, the choice is probably a no-brainer as the retroactive coverage through January has already assured them that the 2019 payments will exceed the required premiums.” To date, more than 60 percent of dairies with established production histories have enrolled in the program. Wisconsin has seen the most participants with more than 4,832 dairy operations, followed by Minnesota (1,865), New York (1,779), Pennsylvania (1,511) and Michigan (702).


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