Morning Commentary

Dec corn up ½ at $3.615

Nov beans up 3 ¾ at $8.7225

The DOW is up

USD is weaker

Crude oil up $1.08 at $55.02

Good morning,

Corn  prices have pushed to fresh new contract lows. Funds are holding a more negative macro perspective, the weather has turned much more cooperative the past several weeks across the U.S., and demand remains suspect. Some bears are saying the DEC19 contract could eventually trade down into the $3.30’s before finding more stable footing. Here at home, the USDA bumped their weekly crop condition estimate higher by +1% to 58% now rated GD/EX vs. the 5-year average of 67%.

Soybean  bulls are talking about slow-developing crops and low pod counts in many parts of the U.S. Here at home, the USDA showed weekly crop-conditions “unchanged” at 55% rated GD/EX. Technically, bulls are hoping the $8.50 level in the NOV19 contract can hold as major support.

Cash fed cattle markets continue to work lower for now. Last week’s trade was generally 2.00-3.00/CWT lower across the country. The northern feeding regions maintain a premium over the south with the average NE steer bringing 105.43/CWT and the average KS steer trading for 102.29/CWT. Placement patterns and quality grade advantages are some of the likely culprits associated with this price spread. Volumes of cattle traded have been sharply lower within the negotiated segment and anecdotally it would appear that some carryover from the last few weeks is building. The reduced trade volumes are noted in negotiated cash and not in the alternative marketing avenues such as formula and forward contracts. If we combine all marketing’s for this previous week the number of cattle is as large as this time of year in 2009 and 109.5% of the 10-year average. The comprehensive beef cutout price is approximately 9% above this time last year and volumes are 12% lower. Forward sales reported this week were much higher, highest print since February. Futures markets continue to trade both sides of steady with very little longer term direction. The weekly chart shows a small wedge pattern developing that could project the Oct19 LC back into the gap left from four weeks ago and near the Aug19 LC expiration. Big picture is we are near long term support and fundamentals would suggest cattle prices are potentially low enough. However, this bottoming will be a process and the imbalance within the industry in terms of risk exposure will create concern, fear and sometimes panic. For these reasons, the futures trade will remain emotional and likely volatile. Trey Warnock – Amarillo Brokerage Company

An army of drones deployed to fight a crop-devouring pest in a southern area of China has recorded a mortality rate of as high as 98%, according to the manufacturer. XAG, a Guangzhou-based drone maker, teamed up with Germany’s Bayer Crop Science in a drone swarm operation to kill the fall armyworm in China’s Guangxi region. The autonomous devices, loaded with low-toxicity insecticide, have also successfully managed the pests in a government-led operation in the southwest province of Yunnan, XAG said. “It is the ‘crop-devouring monster’ that attacks over 80 crop varieties,” XAG said in a statement Monday. Most farmers resort to traditional insecticide sprayers, which not only fail to move fast enough against the “ravenous, fast-moving fall armyworm” that can fly up to 100 kilometers in one night, but also expose them to dangerous chemicals, it said. Drones can safely operate after sunset to kill the pests, which feed most actively at night, XAG said. According to a local media report, drones have also effectively helped to control the spread of the pests found in some cornfields in the northern province of Henan. (Source: Bloomberg)

Ford is recalling more than 550,000 trucks and SUVs in North America because seat backs may not properly restrain people in a crash. The recall covers certain 2018 through 2020 F-150 pickups, 2019 and 2020 Super Duty trucks, 2018 and 2019 Explorer SUVs, and 2019 and 2020 Expedition SUVs. All have manual driver or front passenger seat-back recliner mechanisms. Also included are some 2020 Explorer and Lincoln Aviator SUVs with rear seats with manual seat-back mechanisms. Ford says the trucks may not have a third pawl needed for seat strength, increasing the risk of injury in a crash. Ford says it doesn’t know of any crashes or injuries. Dealers will inspect seat structures and replace them if needed. Most are expected to pass. Owners will be notified starting Oct. 7. (Source: NBC)


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