Morning Commentary

Dec corn down 3 ½ at $3.705

Nov beans down 6 ¾ at $8.9325

The DOW is down

USD is weaker

Crude oil down $.87 at $62.03

Good morning,

Deputy-level U.S.-China trade talks are scheduled to start in Washington on Thursday. U.S. Trade Representative Lighthizer and U.S. Treasury Secretary Steven Mnuchin are expected to meet with China’s top negotiator, Vice Premier Liu He, in early-October. The two sides have not held in-person talks since July. Several large economists believe China is finally starting to feel the pressure of U.S. sanctions, with slowdowns in both factory and consumer sectors deepening in August. In fact, recent data showed China’s industrial production grew at the slowest pace in over 17 years.

Corn bulls are happy to see prices yesterday close at their highest level in several weeks.  The new-crop DEC20 contract closed at its highest level in over a month just north of $4.10 per bushel. Bears are doubting the bulls will be able to find enough in the way of fresh new headlines to keep the rally and momentum alive. The USDA elected to leave overall corn conditions unchanged at 55% rated “Good-to-Excellent” vs. 68% last year. Conditions in Illinois improved by +3% with the crop now rated 41% GD/EX but is still massively below last years rating of 76% by this date; Iowa improved +2% to 65% rated GD/EX vs. 73% last year.

Soybean traders are wondering if bulls can actually push prices higher or was this recent move simply a short-covering rally on the heels of China agreeing to purchase some U.S. soybeans? On the demand side, bulls are pointing to better than expected August crush numbers from the NOPA report at just over 168 million bushels vs. just over 158 million bushels last August.  Iowa crop conditions improved +2% to 63% vs. 72% last year.

President Trump has backed a plan that would raise 2020 U.S. Biofuel quotas +10% in 2020 to compensate for the exemptions handed out to 31 refineries that received waivers. According to sources familiar with the matter, the U.S. EPA will calculate a three-year rolling average of total biofuels gallons exempted from the mandates under its Small Refinery Exemption program and add that figure to its annual biofuel blending quotas each year. For 2020, that figure would be 1.35 billion gallons, according to a Reuters calculation. That would come in addition to a tentative agreement to boost next year’s blending volumes by 1 billion gallons, including 500 million gallons for conventional biofuels like corn-based ethanol and 500 million gallons for advanced biofuels like biodiesel, the sources said. If they follow through with this plan, next year’s total blending mandate would come out to about 22.4 billion gallons, from just over 20 billion in the EPA’s current proposal. The EPA has until the end of November to finalize its 2020 biofuel volumes mandates. (Source: Reuters)

China’s pig herd fell by -38.7% in August versus a year ago, according to data published by China’s Ministry of Agriculture and Rural Affairs, marking another record drop as the impact of a year-long African Swine Fever epidemic continues to emerge. The country’s sow herd has declined by -37.4%. Pork prices are soaring as a result of the shrinking herd, sending the country’s food price index to the highest since January 2012. Many in the industry believe the impact on the herd is much larger than official data suggest. (Source: Reuters)


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