Morning Commentary

Dec corn up 3 ¾ at $3.91

Nov beans up 10 ¼ at $9.435

The DOW is up

USD is stronger

Crude oil up $.54 at $53.85

Good morning,

Stock traders have managed to push the S&P 500 through the 3,000 milestone once again, putting it within 1% of its all-time closing high of 3,025.86 set back in late-July.

Corn bears are considering the fact the USDA has bumped their weekly crop condition estimate higher from 55% to 56% rated “Good-to-Excellent”. The trade seemed to be anticipating a slight decline in overall conditions. The concern is the fact that Nebraska’s ratings were improved by +4%, Ohio ratings were improved by +3%, Illinois and Indiana improves by +2% Iowa, Minnesota, and Wisconsin improved by +1%. The worry now is that the USDA might once again elect not to lower its current yield forecast from the 168.4 average.

Soybeans bulls are a bit disappointed by the USDA electing to leave weekly conditions “unchanged” at 54% rated “Good-to-Excellent” vs. 66% last year. The trade seemed to be expecting a little decline in conditions based on some of the more extreme weather. Conditions in both Kentucky and Missouri were raised by +4%, Nebraska and Tennessee improved by +3%, Indiana, Ohio, and Michigan improved by +2%, Illinois, Iowa, and Kansas improved +1%. The USDA also showed a massive jump in the U.S. harvest from 26% last week to 46% this week vs. 51% last year vs. 64% average.

Fed cattle prices stalled last week and delivered a disappointing blow to the cash bulls for now. Most of the south traded 108.00/CWT and the north trading a range around 110.00/CWT. The trade was slow to develop in all areas and seems to be sluggish after a 9.00-10.00/CWT rally over the last six weeks. Numbers of cattle traded were much lighter which is a bit concerning as we begin to ponder what the cash market will be like this week. Show list numbers were down to start this week. The reduction in numbers on lists is a little curious after a lighter volume week last week. However, it seems most of the industry is looking to get cattle into November and basis the Dec19 LC. Chatter around today would indicate that issues surrounding a short-term KS plant closure last week have mostly been resolved. The slaughter was firm last week with a quite large Saturday kill despite USDA reducing last week’s estimate by 3,000 head. There has been some talk around packer forward contracts recently. This past week did see a sizeable increase in new signings, keeping in mind that we remain well below yearly totals from the last few years. Futures markets remain in an uptrend and managed to grind out a higher close today after showing some fear on Friday. Friday did see 10 loads of steers delivered to Syracuse KS as a result of the negative -2.50/CWT cash basis in the south. If basis were to remain negative additional deliveries against Oct19 LC are likely. The technical setup in the market today is showing some slowing momentum and the rally may be getting a little long in the tooth. Having said all of that, the CFTC COT data continue to show a modest non-commercial buyer on the long side and a more aggressive non-commercial short that is liquidating at an average of 4,600 cars per week over the last four weeks. This alone is enough to support the flat price action for now. Overall bulls still being fueled by the futures action, larger protein shortage story and hopes of robust demand. Bears are a little spooked by the potential of a seasonal fall break and the exhausted/forced nature of the action as of late. Trey Warnock – Amarillo Brokerage Company

Following the move by the U.S. Oct. 18 to apply countermeasures against imports from the European Union in consequence of the World Trade Organization (WTO) Airbus dispute, Commissioner for Trade Cecilia Malmström said the EU will proceed forward with its own retaliation. “We regret the choice of the U.S. to move ahead with tariffs. This step leaves us no alternative but to follow through in due course with our own tariffs in the Boeing case, where the U.S. has been found in breach of WTO rules,” Malmström said in a statement. The EU Commission said it will monitor the impact of the announced U.S. countermeasures on the European products concerned, notably in the agricultural sector. The U.S. imposed a 25% tariff on EU goods include dairy products, French wine, pork, coffee, olives and single malt whiskey. In a letter to the president, Randy Mooney, producer chairman of the National Milk Producers Federation (NMPF), commended the administration for including cheeses from major EU exporters such as Italy, saying the U.S. must reject European efforts to “deceive the United States about the reality of Transatlantic dairy trade.” Mooney stated the U.S. is running a $1.5 billion dairy trade deficit with Europe because of what he said is “unfair EU trade practices” that largely block U.S. access to the EU market, while enjoying broad access to the U.S.


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