Morning Commentary

March corn  up ½ at $3.8375

March beans down ½ at $9.43

The DOW is up

USD is stronger

Crude oil down $.22 at $59.34

Good morning,

Corn traders are eagerly awaiting today’s USDA report. There’s very little to discuss until we get a better look at the newly updated numbers. Bulls are hoping for a sizeable reduction in both harvested acres and yield, which ultimately trims U.S. ending stocks. Most seem to be looking for a -400,000 to -500,000 reduction in harvested acres and a -0.5 to -1.0 bushel per acre reduction in yield. Bears continue to question overall demand. However, with the continued talk of possible Chinese buying in the air, many bears are apprehensive to place a big bet until learning more about the specifics of the “Phase 1” trade deal.

Soybean bulls are hoping to end the week with the USDA trimming production estimates and tightening U.S. ending stocks. Then next week bulls are hoping to learn more about Chinese buying and details associated with the “Phase 1” trade deal. These two major headlines, the USDA and the Chinese trade deal have worked to push the bears to the sideline. The question is what happens after these two big wild-cards are flipped over? Brazil is about to harvest another record-setting crop and numbers here at home are going to start floating around inside the trade that shows U.S. producers are going to plant +9 million more soybean acres in 2020.

Poland recorded 55 outbreaks of African swine fever in wild boar near the German border last month, the world animal health body said on Thursday, in a sign the deadly virus is spreading near one of the European Union’s biggest pork exporters. A report posted on the World Organization for Animal Health (OIE) website showed that the disease had now been found less than 18 miles from Germany. Authorities in German states bordering Poland have built fences in an attempt to stop wild boars wandering into Germany and spreading the disease. (Source: Reuters)

Days before a U.S.-China trade deal is due to be signed, large Chinese purchases of Brazilian soybeans and a pair of unexpected policy moves by Beijing have dimmed U.S. hopes that China would double its imports of American farm products this year. Chinese forward purchases of Brazilian soybeans, including about a dozen bulk vessels this week, or about 800,000 metric tons, are raising doubts Chinese buyers will have an appetite for vast supplies of U.S. soybeans once the deal is done. Margins in China for soybean crushings have improved for mid-2020, the height of Brazil’s soy export season, according to two China-based traders. China’s import needs have already been covered through the first quarter of the year, the traders said on condition of anonymity. No details about the targeted $40 billion shopping list have been published, and China has not confirmed any purchase commitment. Adding to U.S. concerns about the deal, sources in China told Reuters this week that Beijing has suspended its plan to implement a nationwide gasoline blend containing 10% ethanol this year. The plan had spurred hopes of a jump in U.S. exports of the biofuel to China, as well as shipments of U.S. corn to produce it domestically. (Source: Reuters)

World food prices surged for the third consecutive month to reach a five-year high in December, lifted by strong rises in vegetable oils, sugar and dairy as well as rebounding cereal prices, the United Nations food agency said on Thursday. The Food and Agriculture Organization (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar jumped to its highest point since Dec. 2014, averaging 181.7 points, up +2.5% on the previous month. For the year as a whole, the index averaged 171.5 points, +1.8% higher than in 2018 but below the peak of 230 points reached in 2011. The cereal price index rose +1.4% to average 164.3 points, led by higher prices for wheat with stronger demand from China and logistics problems following strikes in France. Vegetable oil prices were up strongly, with the index rising +9.4% to 164.7 points in December. Palm oil prices rose for the fifth month in a row, lifted by biodiesel demand, while soy, sunflower and rapeseed oil values also increased. Dairy and sugar prices also climbed, up +3.3% and +4.8% respectively. By contrast meat prices were almost unchanged from November with higher pig and sheep meat prices balanced by falling beef prices.


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