News

Morning Commentary

Dec corn up 3 ¼ at $3.71

Nov beans up 9 ½ at $8.66

The DOW is up

USD is stronger

Crude oil up $.74 at $54.91

Good morning,

Corn traders continue to debate not only U.S. production headlines but also geopolitical headlines. When we left the market on Friday, bears were talking about increasing trade threats and tensions between the U.S. and China. But over the weekend reports are circulating that President Trump and Japan’s Prime Minister Shinzo Abe have agreed in principle on a massive trade deal that will probably be officially signed next month. To Trade Representative Robert Lighthizer said the deal would open up markets to over +$7 billion worth of goods including agriculture, industrial and digital trade. The Pro Farmer Crop Tour released their final estimate at 13.358 billion bushels on an average yield of 163.3 bushels per acre. These numbers are well below the current USDA estimate of 169.5 bushels per acre and 13.901 billion in total production. Funds were reported short 70,600 corn in Friday’s COT report compared to trade ideas of short 19,000 and a long of 17,200 the week prior. They’re now thought to be short 72,100 lots.  Funds are short corn for the first time in three months. Managed money has now held a short position during August in 6 of the past 7 years. The only year during that time span the fund did not hold a short during August was 2015. The trend for December corn is bearish. The market is poised for a test of contract lows (363.75). A close over 400 is needed to provide fresh upside targets.

Soybean bulls are faced with ongoing uncertainties surrounding Chinese trade negotiations and U.S. production. Late last week both Chinese and U.S leaders raised the stakes by taking a few more swings at one another. This brings about more debate and fear that a resolution is further off in the distance. There’s also a ton of debate and uncertainty surrounding U.S. crop production. The Pro Farmer Crop Tour released their final estimate at 3.497 billion bushels on an average yield of 46.1 bushels per acre. These numbers are well below the current USDA estimates of 48.5 bushels per acre and 3.680 billion in total production. Funds were reported short 84,600 beans in Friday’s COT report compared to trade ideas at 92,000 and 80,000 the week prior. They’re now thought to be short 95,100 lots. Since the third week of July, the fund has increased his net short position by over 38,000 contracts. The average settlement price during that timeframe is 882.75. The trend for November beans is negative. Rallies capped at 871.5 leaves the market positioned for towards 840.  A close over 879.25 is the minimum needed to provide fresh upside targets.

USDA’s cattle on feed report, released Friday, August, 23, showed 11.1 million head of cattle on feed as of August 1, slightly above last years levels and marks the highest inventory since the USDA began keeping records in 1996. Placements in feedlots for the month of July totaled 1.71 million head, -2% below 2018. Marketings came in at 2 million head, +7% higher than last year.

U.S. farms are taking the brunt of retaliatory tariffs placed on their products, according to a Knowledge Exchange report released on Aug. 22 by CoBank, a cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States. CoBank noted that China has found alternatives for U.S. soybeans in Brazil, Ukraine, Argentina and other countries. U.S. domestic purchases have significantly offset the loss of the China market and the United States has increased its export value to the rest of the world by over 60%. However, total exported value for 2018-19 was down by nearly 50%, it said. “With a record crop out of South America and declining demand due to African swine fever in China, the U.S. is unlikely to gain back significant export sales in the coming years,” CoBank concluded.

 

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