Morning Commentary

Dec corn down 3 ½ at $3.8575

Nov beans up 1 ¼ at $9.255

The DOW is up

USD is stronger

Crude oil up $.58 at $56.78

Good morning,

Corn prices start the month of November at almost the exact same spot they started the month of October. In other words, this market has shown very little movement and almost appears stuck in the mud. The DEC19 contract has traded between a low of $3.78^2 and a high of $4.02^4 during the past month and seems comfortable sloshing around in that range. I should note, IEG Vantage, formerly Informa, raised its average U.S. yield forecast from 167.5 to 168.6 with total production bumped higher to 13.792 billion bushels. FCStone also bumped its U.S. corn yield estimate higher from 169.3 to 170.0 and in turn, slightly increased its production forecast. Keep in mind, these numbers are extremely close to the current USDA numbers which project the U.S. yield at 168.4 bushels per acre and total production of 13.779 billion. Bears are pointing to the longer-term USDA numbers that were floating around the trade on Friday. The longer-term numbers forecast 94.5 million U.S. corn acres planted next year vs. the 89.8 million planted this year. The trend for December corn is neutral. Stable action above 398.25 is needed to restart a bull drive (420+/-). Closing under 381 alerts for a return to defensive trade and a test of key support below 370.

Soybean soybean bulls are pointing to fresh export sales to China, strong deliver numbers in the NOV19 contract and some renewed bullish interest in the macro space on headlines of improved trade talks between U.S. and Chinese negotiators. Also, the extremely cold weather and wintery conditions in many areas to the north are adding some complications to the U.S. crop that remains in the field.  Bears are pointing to improved rainfall in several parts of South America. Keep in mind, FCStone just raised its 2019-20 Brazilian soybean crop estimate by +365,000 MTs on an increase in planted acreage. The trade is also digesting some longer-term USDA production numbers that were released on Friday and will be used in some capacity to help generate the long-term USDA Baseline projections in February. The USDA data estimates that 84.0 million soybean acres will be planted next year with an average yield of 50.5 billion bushels and total production at +4.200 billion bushels. In comparison, this year the USDA is currently estimating about 76.5 million planted soybean acres with 75.6 million harvested with a yield average of 46.9 bushels per acre. the good news is they have demand projected higher and ending stocks forecast at a respectable 518 million bushels.

The USDA has released its first outlook for 2020-21 with baseline projections through 2029. The full report will be released in February. The early release is part of the government’s budget process which includes a mandate to forecast government spending, including farm programs, to show what the federal deficit will look like a decade down the road. USDA economists based their outlook on the supply and demand estimates released October 10. The agency will update those forecasts November 8, so take the forecasts with a grain of salt. USDA’s baseline says farmers will plant 94.5 million acres of corn next spring with production for 2020 estimated at 178.5 bushels per acre for a total crop of 15.545 billion bushels, with ending stocks estimated at 2.754 billion bushels. They estimate farmers will plant 84 million acres of soybeans with yields of 50.5 bushels per acre for a total crop of 4.20 billion bushels. Ending stocks are estimated at 518 million bushels.

The early winter weather has many people already heating their homes. And with an abnormal year for the planting and harvesting season, many farmers are needing to grain dry their corn and soybean crops to prevent spoiling, and to keep their livestock warm. The demand is causing major propane shortages throughout parts of the midwest. In Iowa, hours long waits have been reported at terminals as tanker drivers wait for fresh propane shipments to arrive. Some farmers reported three- to four-day delays in their efforts to get fresh supplies. The upper Midwest is supplied with propane by pipelines (Mid-American and ONEOK) flowing north from Conway, Kansas, (home to 7% of the nation’s propane storage), the Cochin Pipeline coming south from Canada, and from rail deliveries. The Cochin Pipeline delivers ethane and propane from Canada to the upper Midwest. Brad Borror, manager – communications for ONEOK said in an email statement, “Due to unexpectedly high demand, two terminals in Iowa on ONEOK’s North System recently experienced temporary inventory outages lasting less than 24 hours. However, the pipeline system continues to move propane to resupply terminals per shippers’ requests.” Governors in Iowa and Wisconsin have signed emergency orders lifting  restrictions on the number of hours liquid fuel delivery drivers can work in order to help ease the supply constraints. (Sources: Successful Farming, WSAU)


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