Morning Commentary

Dec corn up 1 ¼ at $3.70

Nov beans down 2 ¼ at $8.965

The DOW is up

USD is stronger

Crude oil up $5.65 at $60.50

Good morning,

Corn  prices are up +20 cents from last weeks low as tensions with China appear to have eased and the USDA took a step towards trimming U.S. production. Bears however are quick to point out that an official deal with China is still off on the horizon and U.S. weather into early-October looks mostly cooperative. There’s starting to be more talk amongst professional traders that the corn market could now be stuck in range.

Soybean  bulls are hoping to build on last weeks gains. The NOV19 contract has added roughly +50 cents from last weeks lows. There is lots of talk that China is allowing around 5 MMTs of soybeans to come from the U.S. via October, November, December deliveries from the PNW. There’s a ton of speculation regarding how much the Chinese have already purchased, but most sources are thinking between 1 and 2 MMTs. Don’t forget NOPA crush numbers are scheduled to be released today. Most sources are looking for a number of around 162.0 million bushels which would be more than last month and more than last year.

China announced on Friday it would exempt some agricultural products from additional tariffs, including pork and soybeans. China had imposed three rounds of additional tariffs on U.S. pork, including 25% increases in April and July 2018 and a 10% bump this month, raising the total duty from 12% to 72%. For soybeans, additional tariffs of 25% in July 2018 and 5% this month lifted the total duty from 3% to 33%. It was not immediately clear if some or all of the additional tariffs would be suspended. If the additional tariffs are removed, tariffs on U.S. soybeans would return to 3 percent — the same rate paid by importers of Brazilian soybeans, which have largely filled the gap left by the U.S. (Source: Politico)

House Democrats are weighing a short-term spending bill that could temporarily freeze the money available for trade aid payments. The trade aid money is paid out of the Commodity Credit Corporation. The Department of Agriculture is planning to spend upward of $28 billion in payments over two years, but the CCC has a $30 billion borrowing limit that it is expected to hit this year before the completion of a second round of payments. If Congress does not act, then some of the bailout money Trump has promised farmers could not be paid on the administration’s timeline. On Thursday, a Department of Agriculture spokesman said the money would still go out, but the timing of the program could be affected. White House budget officials have asked lawmakers to include a provision in the stopgap spending bill that would avert the borrowing limits but House Appropriations Committee Chairman Nita Lowey, D-N.Y., is proposing to block the White House request. So far, language allowing the CCC to fund the bailout is not in the House’s draft bill, though the text could still change before it comes up for a vote, which many expect to happen this week. Congress needs to pass a continuing resolution by Sept. 30 to keep the government funded into the next fiscal year. (Sources: Politico, Arkansas Democrat Gazette)


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