Morning Commentary

Dec corn down 2 ¼ at $3.71

Nov beans up 3 ¼ at $8.9575

The DOW is up

USD is weaker

Crude oil down $.56 at $58.05

Good morning,

Corn bears are pointing to cooperative weather here in the U.S. along with continued uncertainty in demand. The USDA’s weekly condition estimate which showed the overall crop improving by +2% to 57% now rated “Good-to-Excellent”. Perhaps more important was that top producing states like Illinois improved +4% and Minnesota improved +3%. The USDA also showed 96% of the crop in “dough stage” vs. 100% on average. The USDA showed 79% of the crop “dented” vs. 94% on average. The USDA showed 29% of the crop “mature” vs. 57% on average.

Soybean bulls are happy to hear that Chinese buyers are sniffing around in the U.S. export market for supplies out of both the PNW and Gulf. Some sources inside the trade are saying, Chinese importers, have already purchased another 10 MMTs of U.S. soybeans and are perhaps looking to buy more bushels in the coming days. Keep in mind, however, the Chinese Golden Week holiday is now in play and many buyers will be on break for the entirety of this week.

Cash cattle traded firmer last week and moved larger volumes than was has been witnessed in several weeks. The national average steer price printed 102.02/CWT versus 100.22/CWT last week and total negotiated trade volumes came in at 93,210 head compared to 71,918 the previous week. Expectations are certainly higher for this week with cleaned up marketing’s, higher trending cash markets and optimistic futures action. Show lists for cattle to be sold this week were sharply lower, mostly lead by a reduction in Nebraska numbers. Nebraska show lists have moved from 10 year highs into 10 year lows over the course of 4 weeks. Overall, total show list numbers are very average and the wide Oct-Dec19 LC spread is potentially pulling cattle back. The spot beef market lost approximately 4.50/CWT last week and the outlook for this week seems to be steady at best. Anecdotally, meat buyers are rumored to be more hand to mouth and waiting on additional downside prior to moving into their holiday procurement. Last week’s combined non-fed and fed cattle harvest was estimated at 658,000 head which would be 105% of a 10 year average and the largest print since the last week of June. USDA released cattle on feed numbers Friday. The talk would certainly be largely focused on a overall placement miss, but keeping in mind our on feed numbers and placements remain robust versus longer term averages. Digging into the data a bit would shine some light on the placement miss, Kansas came in well under last year’s massive number and under what would be normal. The thought would be this was lighter placements of flint hills cattle typically placed against Dec19 LC. Futures markets are starting off higher after two consecutive higher closing weeks. A nicely formed and potentially confirmed inverse head-and-shoulders pattern on the daily cattle charts is providing some bullish fuel. The chart formation combined with most contract months being at or above the pivotal 50 day average has turned technical momentum decidedly higher for now. Trey Warnock – Amarillo Brokerage Company

China’s pork imports rose +76% in August from the same month a year earlier, customs data showed on Monday, as the world’s top consumer of the meat stocked up on supplies after African swine fever decimated its pig herd. China took in 162,935 metric tons of pork last month, data from the General Administration of Customs shows, up +76% from August 2018 but down from July’s 182,227 metric tons. Chinese beef imports have also been soaring, up by half in 2018 and increasing a further +60% so far this year. (Sources: Reuters, Financial Times)

Last week was the first time since early June that the national gas price average jumped more than a nickel in under a few days. On the week, it’s a dime more expensive at $2.66 with half of states seeing prices increase by 10 cents or more. However, even with the significant increase, the national average is still cheaper compared to last month (-6 cents) and last year (-19 cents). Spurred by the Saudi Arabian oil facilities attacks the weekend prior, crude oil increased as much as $10/bbl at its highest point early last week to nearly $64/bbl. Gasoline stations reacted just as swiftly, raising local retail prices by as much as a quarter, which pushed the national average up six cents overnight last Tuesday. However, by the end of last week, crude was down to $58/bbl and gas prices started to stabilize as reports surfaced that Saudi facilities should be fully operational by end of September. “The good news is we are seeing downward movement with crude oil prices and stabilization at gas pumps, but Americans can expect some fluctuation through the end of the month,” said Jeanette Casselano, AAA spokesperson. In its latest report, the Energy Information Administration (EIA) measured U.S. demand at 8.9 million b/d, which is a substantial 900,000 b/d drop from the previous week and a low reading not seen since February. The decrease in demand amid the spike in crude oil prices could help to keep gas price fluctuations more moderate through the end of the month. (Source: AAA)


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