Morning Commentary

March corn down ½ at $3.8425

March beans down 1 ¼ at $9.435

The DOW is up

USD is stronger

Crude oil down $.43 at $62.84

Good morning,

Corn bulls are talking about production problems spreading across Brazil’s Rio Grande do Sul region. Even though this is just the country’s third-largest grain production state there’s worry that production losses from overly dry conditions could be mounting. As it might sound worrisome in the headlines I’m afraid this might have more bark than bite. FCStone yesterday reportedly dropped their estimate for the area from 6.0 down to 4.8 MMTs, which is a -20% reduction. Moral of the story, while this is worth keeping an eye on, be careful thinking it’s overly bullish or massively market moving at this juncture. The trend is neutral.  Stable trade outside 379-395 is needed to provide fresh trending targets.

Soybean bulls are pointing to rumors that a Chinese delegation might be coming to the U.S. this weekend ahead of signing the “Phase 1” trade deal. Bears are quick to remind the trade that “framed contracts” do not necessarily imply new or greater business for the U.S. soy exporters but rather political promises. The trend is neutral.  Market action capped at the mid-point of Friday’s range should flag for follow through selling.  Stable trade outside 931-951 is needed to provide fresh trending targets

Borden Dairy Co., one of America’s oldest and largest dairy companies, on Monday became the second major milk producer to file for bankruptcy in the last two months. Dean Foods, America’s largest milk producer, filed for bankruptcy November 12. Borden said it filed for bankruptcy because it cannot afford its debt load and its pension obligations. It has 3,300 employees, 22% of whom are covered by a collective bargaining agreement. The company said it also has been hurt by broader industry trends, including a 6% drop in overall US milk consumption since 2015. Borden noted that more than 2,700 family dairy farms went out of business last year, and 94,000 have stopped producing milk since 1992. With the wholesale cost of milk rising due to fewer suppliers and retail milk prices weaker due to lower consumption, the margins for milk processors like Borden have suffered, the company said in its filing. The company said it had net sales of +$1.2 billion in 2018, but that resulted in a net loss of -$14.6 million. From January 2019 through December 7, Borden reported a net loss of -$42.4 million, according to its bankruptcy filing. (Source: CNN) 


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