Morning Commentary

Dec corn up ¼ at $3.715

Jan beans down 1 ¼ at $9.17

The DOW is up

USD is weaker

Crude oil down $.43 at $57.29

Good morning,

Corn  traders and producers alike are considering another week of lower highs and lower lows. Technically, the DEC19 contract has traded sideways to lower for the past four weeks after posting a short-term high back on October 14 at $4.02^4. We are now well below all major moving averages and about to challenge more serious long-term technical support. The funds are thought to now be short about 125,000 contracts and showing no major signs of flipping their position, especially if South American weather continues to cooperate and the Chinese trade deal remains in a state of flux with no real or official details. Ethanol has slowly improved for the past few weeks but it’s still the lowest production start to Q4 in over four years.

Soybean  bulls will be trying to recover from another week of price deterioration. In the past 30-days, JAN19 soybean prices have trimmed nearly -50 cents off their mid-October high of $9.59^4. Interestingly, bulls believe the USDA is still overestimating the U.S. crop, at the same time, we are now digesting record-setting U.S. crush numbers. The recent NOPA estimate released showed an October crush of roughly 175.4 million bushels, a new record high for any month and perhaps reason enough to argue the USDA’s recent reduction in crush might have been a bit premature.

The IEA added to growing bearish sentiment in the oil market, predicting supplies outside OPEC will increase by +2.3 million barrels a day in 2020, almost twice the expansion in demand. That means OPEC is currently pumping about 1.7 million barrels a day more than will be needed in the first half. The hefty cushion will offer “cold comfort” to OPEC+ ministers gathering next month, the IEA said. Oil inventories in developed nations accumulated by about 9 million barrels during the third quarter, even as OPEC deliberately restrained output and Saudi Arabia lost supplies in the Sept. 14 attack on its Abqaiq processing plant. The calmness the IEA sees resuming next year fits with its expectations for the long term, outlined in its annual World Energy Outlook earlier this week. That report anticipates that increasingly efficient car engines and the adoption of electric vehicles will cause world oil demand to plateau around 2030. (Source: Bloomberg)

U.S. Secretary of Agriculture Sonny Perdue announced the second tranche of 2019 Market Facilitation Program (MFP) payments aimed at assisting farmers suffering from damage due to trade tariffs. The payments will begin the week before Thanksgiving. Producers of MFP-eligible commodities will now be eligible to receive 25% of the total payment expected, in addition to the 50% they have already received from the 2019 MFP. Signup at local FSA offices will run through Friday, December 6, 2019. A producer’s total payment-eligible plantings cannot exceed total 2018 plantings. County payment rates range from $15 to $150 per acre, depending on the impact of trade retaliation in that county. Acreage of non-specialty crops and cover crops had to be planted by August 1, 2019 to be considered eligible for MFP payments. This is the second of up to three tranches of MFP payments. The third tranche will be evaluated as market conditions and trade opportunities dictate. If conditions warrant, the third tranche will be made in January 2020.


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