Morning Commentary

Dec corn up 1 at $3.92

Nov beans up 4 at $9.38

The DOW is up

USD is weaker

Crude oil down $.23 at $53.55

Good morning,

Corn bulls are needing to see fresh headlines in order to attract new bullish money-flow. Bears are pointing to disappointing ethanol headlines associated with uncertainties surrounding RFS and blending regulations, as well as, lack of specifics regarding “Phase 1” of the Chinese trade agreement. What will the Chinese agreement mean for U.S. corn, ethanol, DDGs? As the bulls pause based on “uncertainty” it causes more “fear” to start brewing inside the market. That fear can then begin to circulate and cause more hesitation by the bulls. Hence the reason professional traders often quip that we need to keep the bulls fed with fresh new headlines in order to keep the market moving higher.

Soybeans prices have rallied +80 cents from the early-September lows. Technically, we should start to run into much stiffer resistance on the charts up between $9.40 and $9.70 per bushel vs. the NOV19 contract. Keep in mind, we posted a high in the NOV19 contract back in mid-December of last year at $9.71 per bushel. We then traded down to a low of around $8.15 by mid-May. Then rallied back to a high of $9.48 by mid-June. Unfortunately, the NOV19 contract has never traded back above that level since.

Reports are circulating that about -20% of Vietnam’s hog herd has quickly been lost due to African Swine Fever. There’s really no way to fully know if the outbreak has been contained so many suspect the numbers are going to get worse before they get better.

Now that the U.S. and China have reached a partial trade deal including promises of massive Chinese ag purchases, USDA is deciding whether to go through with the next installment of trade relief payments to farmers for 2019 production. USDA Deputy Secretary Stephen Censky said last week that the department is aiming to make a final call “in the very near future.” The department is divvying up the $14.5 billion it allocated for direct payments in three installments: The first round became available over the summer, while the second and third tranches will be available in November and January, if warranted. China has already started buying greater quantities of U.S. soybeans, pork and other farm goods in recent weeks, and the Trump administration claims Beijing will soon ramp up its purchases to more than $40 billion per year. That could make it harder for USDA to justify doling out the remainder of the $14.5 billion allotted for this year’s direct aid program. (Source: Politico)

U.S. Department of Agriculture pork export sales data issued on Friday for Oct. 4-10 included “a significant quantity” that might have been sold in previous weeks, the agency said, after traders and analysts questioned the accuracy of the weekly report. Traders have been paying close attention to U.S. sales amid the devastating ASF outbreak in China that has tightened global meat supplies. The report showed U.S. sales of 292,161 tonnes for 2019, a high for the year, including record-large weekly sales to China and Mexico. Sales to Mexico, the largest export market for U.S. pork, surged to 132,381 tonnes from 2,692 tonnes a week earlier, prompting skepticism among traders. The USDA did not provide details about the size of sales from previous weeks that were included in the latest report. It also did not reveal which countries bought the previously unreported pork. Underreporting pork exports could help keep U.S. hog futures prices lower than they otherwise would be. An official from Foreign Agricultural Service in Washington told Reuters on Tuesday that the agency had identified shippers who were not reporting pork sales, though he did not say why. (Reuters)


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