Morning Commentary

Dec corn down 1 at $3.7425

Nov beans up ¼ at $9.2525

The DOW is down

USD is stronger

Crude oil down $.86 at $56.30

Good morning,

Corn closes sub-$3.80 for the first time since late-September. Bulls are getting cold feet or simply remembering the pain that followed the past couple of USDA reports. The DEC19 contract has now given back about -25 cents from the mid-October highs, yet we are still higher priced on this date than we have been the past four years. Bears continue to talk about weakness in demand. Exports continue to disappoint and running well behind last years pace. We still have ethanol and DDG exports running about -10% less than last year and continue to be a headwind. Bears are also pointing to improved weather conditions in South America. Bottom-line, bulls have to be somewhat worried that any reduction in the U.S. crop estimate could easily be offset by lower demand numbers and perhaps a slight bump in South American production.

Soybean bulls are talking about strong export sales and improved headlines surrounding Chinese trade negotiations. Not only were weekly export sales stronger than anticipated but Chinese buyers were reported as leading the way. As for U.S. production, most sources are looking for the USDA to adjust its estimate slightly lower and in turn, slightly reduce U.S. ending stocks. Bears point to improved weather in South America, and still no official Chinese deal or specific details on how the “Phase 1” compromise will play out? All eyes on today’s USDA report.

China is considering the removal of restrictions on poultry imports from the United States, state-owned Xinhua News Agency reported on Thursday. The report comes after the commerce ministry said the two country have agreed to cancel in phases the tariffs imposed during the months-long trade war. China has banned all U.S. poultry and eggs since January 2015 due to an avian influenza outbreak, which has been over for years. That caused imports to tank after the United States shipped $390 million worth of poultry and products to China in 2014. The following year, shipments were less than a fifth of that, at $74 million. (Source: Reuters)

African swine fever (ASF) will cut pork output in China, the world’s largest producer, by at least -20% in 2019, the United Nations’ food agency said on Thursday, doubling the decline it had expected six months ago. The disease has slashed China’s hog herd since August 2018, pushing Chinese pork prices to record high. With the disease also spreading to neighboring countries, notably Vietnam, Laos, Mongolia and Cambodia, the UN’s Food and Agriculture Organisation (FAO) expects world pigmeat production to fall -8.5% this year to 110.5 million metric tons (carcass weight equivalent). FAO projects world trade in meat and meat products at 36.0 million metric tons in 2019, up +6.7% from 2018, principally driven by increased imports by China due to domestic tightness caused by ASF-related production losses. (Source: Reuters)


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