Morning Commentary

Dec corn up 3 ¼ at $3.95

Nov beans up 5 at $9.33

The DOW is

USD is weaker

Crude oil down $.33 at $53.03

Good morning,

Corn  bulls are needing to find the next major catalyst. We were able to drive the DEC19 contract above +$4.00 early in the week on the combination of the harsh U.S. winter weather and the late-maturing crop. The problem is the bulls who are betting on a lower U.S. yield are more than likely already in the market. Chinese trade talks have certainly improved but we still have no idea what that means for U.S. corn. Total U.S. demand is currently a bearish card in the deck as ethanol and exports continue to underachieve. The trend for December corn is neutral positive.  Closing under 379.5 alerts for a return to defensive trade and a test of key support at 369. Stable action above 398.25 is needed to restart a bull drive (420+).

Soybeans  bulls need to be fed! The lack of fresh news regarding Chinese headlines and rain in the forecast for many parts of Brazil and Argentina has caused the bulls to pause. The recent domestic crush numbers were a bit suspect and have raised some eyebrows. At the same time, there’s just a ton of uncertainty still surrounding the Chinese. Not only Chinese trade talks but also the continued uncertainty involving the spread of African Swine Fever. The trend for November beans is positive. Stable action over 944 is needed to drive the next leg higher (965+/-). Closing under 920.75 alerts for a return to corrective action.

US Ag Secretary Sonny Perdue says farmers should see disaster aid funding soon. “Farmers who are eligible for individual disaster aid that signed up last month, the money should start flowing in this week.” Perdue told reporters in Georgia Tuesday there were some delays at the Office of Management and Budget. “Well, we thought we had it done three weeks ago, and we had to redo some of that to make them happy.” He says they are working with the states on block grants to cover damage to non-traditional items like timber and animal facilities. (Source: Brownfield Ag News)

Cargill on Wednesday announced plans to expanding its integrated soybean crush and refined oils facility in Sidney, Ohio. The company plans to spend approximately $225 million to increase crush capacity and modernize operations.  While the increase is processing capacity was not revealed, they said the project is expected to be completed in 2022. In other news, Biodiesel Magazine reported that Cargill’s 60 mln gallon biodiesel plant in Wichita, Kansas, is now operating at capacity. The new facility is located next to Cargill’s oilseed processing plant and replaced an existing soybean oil refinery

U.S. authorities have started active preparations in response to the rising threat of an outbreak of African swine fever, the deadly disease that has decimated the Chinese pig population and is spreading across Asia. The Agriculture Department’s Animal and Plant Health Inspection Service led several functional exercises and drills late last month, working off a scenario of an outbreak of the virus in Mississippi that traveled across state lines before it was discovered. Fourteen states participated in the drill. Experts say the most likely vector for the disease arriving in North America is tainted animal feed. There is insufficient American organic soy, so hog farmers wishing to feed their animals organic soy often import it from China. And there are feed ingredients — B vitamins and trace minerals — that are manufactured only in China. The virus can survive for up to a month on these products, so they must be quarantined and heated to kill the virus. But this isn’t the only risk for an outbreak. The virus could also be carried by human travelers via the illegal smuggling of meat or other infected food.

Investing in animal agtech is gaining traction from corporations as well as private equity. Keep in mind there are numerous trends shaping the landscape in this sector including demand for protein as populations become wealthier, natural resource constraints, globalization of the food supply in general and constant pressure on producers to be more efficient and of course sustainable. I should also mention, death and disease in food animals is still a large problem, with estimates that 20% of production animals are lost annually. These trends, combined with pushes from regulators, consumers, and companies across the supply chain to eliminate the use of growth-promoting antibiotics is influencing the demand for new livestock medicines and vaccines as well.

Associations like the National Pork Board are getting into the mix as they seek to identify new and emerging technology solutions addressing the operational needs of their producers across the supply chain of pork production. From what I understand, agtech accelerator SVG Ventures-Thrive, has joined up with the NPB as its innovation partner to develop a targeted pipeline of livestock and animal health startups that support that mission along with their focus for providing a healthy, safe, environmentally sustainable product for the food supply chain. SVG has prepared an interesting landscape map shown below, of animal agtech companies that reflect technology companies that are building or have built a solution for specific markets. 

Start-ups on the map range from pre-seed to companies with significant growth and revenue and the 95 companies have a known investment total of over $500 million. I should mention, analysis of known funding indicates a large outlier in the feed category for poultry with a $122 million investment in AgriProtein. This investment outweighs all other known investments by a factor of two. Overall, the categories of feed, health and data management are active and well-funded within the start-up ecosystem. As investors look to this sector for opportunities, keep in mind changing food production practices also include technology that is disrupting not only how food is produced, but how it is transported, presented and sold to unknowing consumers. National Pork Board’s Director of Emerging Technology, Andy Brudtkuhl, reminds investors to understand this is a trillion-dollar industry where it’s never been more important to be ahead of emerging trends.

Emerging a bit slower than others, the aquaculture space is a unique market that’s scarcely been touched by the technologies that are common in other agriculture and animal health sectors. It’s a big market, and only growing with demand for protein. Currently, there’s a strong drive to find sustainable models to farm and protect biodiversity, as well as finding solutions for oral delivery of vaccines and therapeutics and fishmeal replacements. From what I understand, investors are starting to take the plunge in companies like  Aqua-Spark.  Investors looking to position themselves ahead of these trends may want to consider a trip to San Francisco in March to attend the Animal Agtech Innovation Summit. (Source: worldagtechusa, agfunder,, techaccel)


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