Morning Commentary

March corn down 3 at $3.8625

March beans down 7 1/4at $9.225

The DOW is down

USD is weaker

Crude oil down $.55 at $57.99

Good morning,

Corn bulls will be trying to add to last week’s small gains. There’s been continued talk and rumors of Chinese buyers looking at U.S. corn. In fact, there was some talk that China had booked five cargoes of U.S. corn off the PNW. From an economic standpoint this makes sense for the Chinese as U.S. corn seems to currently be the cheapest and the purchase would work to help fulfill their “Phase One” agreement. This would also help improve U.S. exports which have been lagging the USDA’s forecast. With no real major wide-spread weather complications in South America at the moment, ample U.S. supply at +1.8 billion bushels, and talk of increasing U.S. corn acres in 2020, it’s just tough to get wildly bullish nearby especially when you start thinking about the headline trading algo and quants.

Soybean bulls will be trying to stop the bleeding. The high in 2020 was posted on the first trading day of the new year and is now about -30 cents lower. Bears are thinking prices could easily be pressured down to larger psychological support around $9.00 per bushel, especially with more talk of another record crop now being harvested in Brazil and improved conditions in Argentina. Bears are also pointing to the fact Chinese buyers have been purchasing Brazilian soybeans for March/April deliveries, which is normal for this time of year, but a disappointment to the bulls who were hoping to see associated “Phase One” buying kick-in. Remember, SAM generally wins the Chinese soybean business out into July-August. In other words, we might not see heavier Chinese buying until it becomes more economically acceptable. There’s also been data circulating that brings about debate regarding overall Chinese demand. Pork production in China during 2019 declined a whopping -21.3% from the previous year, the lowest since 2003. Additionally, the National Bureau of Statistics reported China’s total pig herd at the end of 2019 was down a massive -27.5% from the previous year. The good news is China’s total meat production in 2019 fell by just -10.2%, as poultry production increased +12.3% and beef production increased by +3.6%, helping to partially offset the problems being faced in pork production.

China has opened its market to Russian beef supplies and has certified two Russian producers for deliveries starting from this Friday, Russia’s agriculture safety watchdog said. China’s decision to open its beef market to two of Russia’s producers is the result of years of talks and is unrelated to the situation with African Swine Fever, Rosselkhoznadzor representative Yuliya Melano told Reuters. The two Russian producers are Bryansk meat company, part of privately held group Miratorg, and another privately-held firm Zarechnoe, Melano added. The deal on beef was reached days after Russia’s watchdog issued a warning that it could temporarily limit supplies of some types of fodder and fish from China. (Source: Reuters)


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