News

Morning Commentary

Dec corn down 2 ¾ at $3.92

Nov beans up ½ at $9.32

The DOW is up

USD is weaker

Crude oil up $.53 at $54.46

Good morning,

Corn prices continue to trade near the upper end of the recent range. Bulls are talking about the USDA resurveying both North Dakota and Minnesota with the data being used in the November report. Bulls are also pointing towards other late-planting and late-harvest years where the USDA has made some downgrades to their production estimates with more data being available and collected. This morning the trade will be digesting the latest in weekly export sales, which are expected to be less than desired. Remember, weekly export sales are already down double-digits. While ethanol margins seem somewhat improved there is still a ton of questions surrounding overall corn used for ethanol. Weekly production is still lower than what is needed to reach the USDA forecast and total supply continues to build a bit, so the bears keep using this card in their hand. 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+). With the trade count showing the fund buying 12,000 corn yesterday, they’re now thought to be short 153,000 lots.

Soybeans bulls should recognize that the window-of-opportunity is between now and mid-January, and perhaps sooner rather than later. If South American weather cooperates the trade will eventually start backing out premium. The crop in South America is somewhere between 20% and 30% planted and they will have supplies ready for exporting by late-January and early-February in some locations. Technically, we are keeping a close eye on the previous high set back in June at $9.48 in the NOV19 contract. For what it’s worth, the annual high in this contract was posted on December 12th of this past year at $9.71 per bushel.

Tyson Foods announced a ban on the use of the growth hormone “ractopamine” in the hogs they buy starting in February 2020. From what I understand, they are trying to better position themselves to supply China with pork.  Remember, China banned ractopamine both domestically and in all imported supplies. Keep in mind Smithfield doesn’t use ractopamine and earlier this month, JBS USA announced they ere eliminating its use.

The Trump administration’s decision to move the agency out of Washington has led to the USDA’s Economic Research Service losing its top expert on market consolidation at a time when declining competition in agriculture is under increased scrutiny from policymakers and government officials. Agriculture Secretary Sonny Perdue announced his plan to relocate the ERS and another USDA agency, the National Institute of Food and Agriculture, from D.C. to Kansas City in August. The move has resulted in the loss of about 75% of employees at both agencies. Among the departed staff at the ERS is James M. MacDonald, who formerly ran a branch of the agency focused on agriculture markets, productivity, and innovation. He is regarded as a leading expert on market consolidation and worked at the ERS for more than 30 years. Laura Dodson, an economist at the ERS who worked under MacDonald, describes him as “the best in the country” at understanding agricultural market consolidation issues. “I’m not sure whether people realize that this knowledge is very niche and specific, and it takes decades to be an expert in dairy market consolidation,” she said, speaking to one of MacDonald’s areas of expertise. With him gone, “we cannot answer big questions about that anymore.” Dairy consolidation has been a particularly pressing concern for farmers as that sector faces ongoing low prices and oversupply. More than 2,700 dairy farms shuttered in 2018.

 

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