Morning Commentary

March corn down ¾ at $3.7625

Jan beans down ¼ at $9.01

The DOW is down

USD is stronger

Crude oil down $.23 at $59.01

Good morning,

Corn: The trend for March corn is negative.  A close below 373 would prompt the next leg down.  A close over 389.5 confirms additional corrective action.  Based on the trade count, funds are thought to be short 135,000 lots.  Corn closed higher Tuesday for the first time in six days.

Beans will need Chinese buying to support the market today with computer models introducing a rain event in southern Argentina Dec 19-20.  Some believe Chinese buying will slow with buyers thought to have used up much of the 18 cargo quota.  Not to mention recent price strength (premiums and ocean freight). Given the three day break in meal coupled with the market’s proximity to key short term support at 296.90 makes today an important session for near term direction.  The trend for January beans is neutral.  Stable trade outside 889.5-902.5 will provide fresh trending targets.  Based on the trade count, funds are thought to be short 68,000 lots.  Effective at the Close Of Business, bean margins will be reduced by $90-$190 per contract.

Seth Meyer, associate director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri and immediate past chairman of the USDA’s World Agricultural Outlook Board, says growers will likely see lower prices in 2020. “If we return to trend yields and normal planting progress, we’re going to see both lower corn and soybean areas- maybe $3.60-$3.65 for corn and $8.60 or so for soybeans,” he says. “So, lower than they are today as supplies expand.” Meyer tells Brownfield his outlook is based on if the trade climate continues as it has this year. “We had unusual planting weather this year, it cut acreage that helped keep supplies constrained and if we go to more normal planting progress next year we’re going to have bigger supplies because those acres are going to be planted,” he says. “I think it is hard to envision short of some trade deal that we won’t see larger stocks for a bunch of commodities.(Brownfield Ag)

President Donald Trump’s decision to reinstate tariffs on Brazilian steel and aluminum, which took the government of Jair Bolsonaro by surprise, poured cold water on Brazilian expectations the U.S. would soon resume imports of fresh beef from the South American country, according to the people who asked not to be identified because talks aren’t public. On Monday, Trump accused Brazil and Argentina of cheapening their currencies to the detriment of U.S. farmers. Brazil’s government, which has aligned itself heavily with the U.S., has denied it’s weakening the real, with Economy Minister Paulo Guedes calling Trump’s move a terrible mistake. In addition to the deteriorating political mood, U.S. food safety concerns about Brazilian beef remained after American inspectors visited meat plants in June, one of the people said. After the audit, the U.S. decided to keep the ban and requested corrective actions to Brazil. (Source: Bloomberg)

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