Morning Commentary

Dec corn up 2 ¼ at $3.7325

Nov beans up 4 ¼ at $8.70

The DOW is up

USD is stronger

Crude oil up $.29 at $56.07

Good morning,

Corn  traders continue to debate U.S. yield and total harvested acres. The late-planted crop and cooler than normal temperatures are creating a lack of GDD’s. How much this ultimately takes off the upper end of the yield is being debated. Also being discussed more heavily as of late are headlines surrounding ethanol. Yesterday reports circulated that a plant opened back in 1994 in Winnebago, MN, called Corn Plus, was now being forced to close its doors. The previous record for corn prevent plants was set in 2013 when 3.6 million acres were prevented from being planted. Over the last decade, the average prevent plantings was 1.8 million acres. In 2019, corn acres prevented from being planted soared past the previous record by nearly 8 million acres to reach a new record of 11.4 million acres, +215% higher than the previous record. The trend for December corn is neutral-negative. Rallies checked at 381 leaves the market poised for a test of contract lows (363.75). A close over 400 is needed to provide fresh upside targets.

Soybean  prices continue to trading near multi-month lows as bulls see very little fresh or new to chew on. We received a slight bounce on talk that President Trump is going to find a way to boost biofuel demand. For soybeans, the previous record for prevent plantings was set in 2015 when 2.2 million acres were unplanted. Over the last decade prevent plantings have averaged just over 950,000 acres. In 2019, soybean prevent plantings totaled a record-high 4.5 million acres, 99% higher than the previous record. The trend for November beans is neutral-negative. Stable action over 879.25 is the minimum needed to provide fresh upside targets. Closing under 854.5 signals a drop towards 840.

The previous total prevent plantings record, set in 2011, was just shy of 10 million acres for the eight principle crops (Prevent Planting Implications for 2017). Recently released Farm Service Agency crop acreage data revealed that as of late August prevent plantings were record-high at nearly 20 million acres, more than double the previous record. More than 200 U.S. counties had more than 25,000 acres in prevent plant. Of those counties, more than 80 had more than 50,000 prevent plant acres and 17 counties had more than 100,000 acres in prevent plant. (Source: Farm Bureau) 

U.S. Secretary of Agriculture Sonny Perdue yesterday announced his agency is launching an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices. “If any unfair practices are detected, we will take quick enforcement action,” Perdue said in a statement. The investigation comes as part of the agency’s efforts to monitor the impact of a recent fire that shuttered the Tyson Foods plant in Holcomb, Kansas. Cattle prices have tanked because the fire temporarily eliminated a key buyer of livestock and, according to Reuters, farmers have worried that meat packers such as Tyson, Cargill Inc and JBS USA would take advantage of the situation by dropping their offering prices. At the same time, beef prices have climbed as buyers for restaurants, food service companies and grocery chains are scrambling for meat. Profit margins for the packers are above $400 per head of cattle slaughtered, up from around $150 before the fire and well above the previous record of $308, according to Denver-based livestock marketing advisory service (Sources: USDA, Reuters)


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