Morning Commentary

March corn up ¾ at $3.8725

Jan beans up 1 at $9.255

The DOW is up

USD is stronger

Crude oil down $.19 at $60.99

Good morning,

Bulls are disappointed by Wheeler and the EPA’s decision to move forward with the suggested Department of Energy’s RFS proposal rather than actual original waivers issued which now creates some uncertainty that corn-based ethanol blending will reach at least 15 billion gallons. Bears are also talking about improved weather and rainfall in parts of Argentina. The trend for March corn is neutral.  Stable trade outside 378.5-395 is needed to provide fresh trending targets.  Certainly not today but be mindful of the gap on the weekly continuation chart at 374.5.

Soybean bears are pointing to Chinese buyers continuing to book more cargoes of Brazilian soybeans from late-February forward. The fear is Chinese importers are about full in regards to supply for late-Dec-Jan-Feb. Meaning Chinese buyers are starting to book shipments further out and Brazil is clearly more competitive. Consistent with flagging action, Jan beans closed lower for the second consecutive session.  Trade featured liquidation in Jan and fresh speculative selling in March.  Reflecting a change in ownership, open interest was little changed.  The trend for January beans is positive but the daily chart is overbought.  Stable action over 924.25 should signal a return to the recent swings highs near 960.  The upper boundary of a bear channel intersects the market in the mid-940 area.  Closing under 904.25 alerts for a consolidation of recent gains. 

The Trump administration finalized U.S. biofuel blending requirements for 2020 on Thursday, leaving a key part of the rule unchanged from an earlier proposal that the corn lobby had criticized as inadequate to help struggling farmers. The finalized rule increases the volume for blending requirements to 20.09 billion gallons in 2020, up from 19.92 billion gallons in 2019. The mandate included 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019. The point of contention involves a plan the EPA introduced in the rule to compensate the biofuel industry for the agency’s expanded use of exemptions from requirements given to oil refiners. The rule finalizes the methodology based on the 2016-2018 annual average of DOE recommendations. The biofuel industry wanted the adjustments to be based on actual volumes waived, since the EPA routinely waives higher volumes than the DOE recommends. Biofuel advocates, including Iowa Senators Chuck Grassley and Joni Ernst, claim the finalized plan does not reflect an unofficial agreement they reached with the administration this fall.(Reuters)

Mosaic said on Thursday it will reduce fertilizer production until market conditions improve, as a difficult harvest season in North America has led to reduced fertilizer usage. “A third consecutive disappointing application season in North America has led to continuing high inventories and price weakness,” Mosaic Chief Executive Officer Joc O’Rourke said. The company plans to cut phosphate production at its Central Florida facilities by 150,000 metric tons per month, and has already reduced it by 500,000 metric tons in the first half of the year. The next year could also be tough for the fertilizer maker, mainly due to lower price expectations for phosphate, JPMorgan analysts said in a recent note. (Source: Reuters)


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