Morning Commentary

Dec corn up 1 at $3.6875

Jan beans up 3 ¼ at $9.135

The DOW is up

USD is stronger

Crude oil down $.77 at $56.28

Good morning,

Corn  bulls continue to struggle as the U.S. harvest moves beyond 75% complete, the weather appears more cooperative here at home and in South America. At the same time, the trade continues to hear mixed rhetoric surrounding Chinese trade negotiations. The USDA’s latest data suggest the U.S. harvest is now 76% complete vs. 92% on average.  Technically, it’s starting to feel like the market wants to drift downward and settle in that $3.50 to $3.80 range

Soybean  traders continue to debate several big-ticket items i.e. total U.S. production, South American weather, and Chinese trade. The USDA is showing the U.S. harvest is now 91% complete vs. 95% historically. Which means there’s arguably 6.5 to 7.0 million acres still left to harvest.

Cattle:  The news coming into today’s session largely surrounded confirmation from Tyson Foods Inc that the Tyson-Holcomb KS plant would soon be operational. The short version is through the month of Dec they intend to step up production in hopes of being mostly if not fully operational by Jan 2020. Depending on which slaughter numbers you choose to analyze, the harvest was either reduced by an immaterial amount year-to-date or slightly increased. Basically, estimated fed and the non-fed slaughter was not negatively impacted through this capacity strained phase. Now, we must ask ourselves what are the implications moving forward? Obviously, production may go up, but it could also have a tepid effect due to other market participants slowing down to breath and repair while Tyson moves back into a more normal state. Furthermore, we will get Holcomb operational heading into some of our worst domestic beef demand in the first quarter. Conversely, if the widespread between Dec19 LC-Feb20 LC causes some cattle to be deferred into 2020 and if the hopes of a better packer demand incentivize holding cattle back then the near-term effect could tighten market-ready numbers. This is met with a potentially lofty beef market that is seasonally on the heels of a setback and holiday beef movement nearing a peak. Many things to mull regarding these developments and we must wonder how much is already priced in the futures market. On Friday (8.9.19) prior to the plant fire, Feb20 LC settled at 115.700 and made a low close on 9.9.19 at 106.075. We are now 125.100 in that same futures contract which is approximately 18% off the low close and 8% higher than the settlement on Friday pre-fire. Cash trade last week printed steady to firm in the northern regions while the south traded slightly higher on lighter volumes in all areas. Cattle on show lists for this week’s trade were nearly 13,000 head smaller and was mostly attributable to reductions in Kansas. Live cattle futures open interest is up nearly 63,000 cars since the low on 10.15.19 and Feb20 LC is near 5.000/CWT higher than it was at the same time. Technical momentum is mixed, the overall trend is up but behaving a bit toppy. Last week was the first weekly lower close in 10 weeks and some technical support has been violated with the recent action. Traders are beginning to find themselves in a more normal position with the non-commercial short-covering aggressively last week and commercial hedgers slightly over normal for percent hedged. If any one group of traders sticks out it would be the index player. They are approaching historically long levels and nearing a position size like that of this past spring. Trey Warnock – Amarillo Brokerage Company

Another biodiesel plant shut down last week in Indiana, leaving 14 workers unemployed ahead of the holidays — in part due to Congress’ failure to extend a tax credit for biodiesel blenders. The $1-per-gallon subsidy has propped up the industry since 2005, but the credit lapsed at the start of 2018 along with a crop of other temporary tax provisions known as “extenders.” Integrity Biofuels is the tenth biodiesel plant that has been idled this year, putting some 250 employees out of work, according to the National Biodiesel Board. The industry and its allies on Capitol Hill have called on congressional leaders to renew the credit by the end of 2019, as part of a potential year-end appropriations package. In the past Congress has retroactively renewed it with sweeping bipartisan support. (reuters)

GROWMARK and its cooperative members have acquired a propane terminal from Plains LPG Services near Fort Madison, Iowa.  Carol Kitchens with GROWMARK tells Brownfield discussions leading up to this deal began last year. “This process was started, I know, earlier last year and I think Plains was the original owner, and they were looking to reposition the asset, and so they reached out to us.” Kitchens says GROWMARK already has propane terminals in several other Midwest locations, and adding Fort Madison is well-positioned to serve members soon. As far as propane delivery problems many regions are experiencing, Kitchens doesn’t expect any immediate changes. “In the short term, I’m not sure it changes a lot, to be honest with you, I mean the biggest challenge is getting supply out of the mid-south and deep-south of the United States where there’s plenty of propane, we just can’t seem to get it very effectively up into the upper Midwest.” She says the industry is evaluating its infrastructure to determine what can be done to prevent delivery issues in the future. (Source: Brownfield Ag News)


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