Morning Commentary

March corn up 2 ¼ at $3.8975

March beans up 3 ¼ at $9.1925

The DOW is up

USD is weaker

Crude oil down $.57 at $57.81

Good morning,

Corn bulls continue to wait for confirmation of Chinese importers buying U.S. corn. There have been rumors and talk as of late that make it reasonable to believe Chinese buyers are in the market for U.S. corn. With U.S. corn one of the most competitive in the global market, the move would make a lot of sense. If the rumors are true the obvious question becomes how much and when will it ship? Bulls are hoping the recent strength in the wheat market and just the thought of the Chinese buying U.S. corn is enough to keep the market somewhat supported. From a technical perspective, the market continues to orbit around the 100-Day Moving Average. Many inside the trade believe the MAR20 contract is rangebound between $3.75 and $3.95. To breakout tot the upside the trade will need to see confirmation of buying by the Chinese and more widespread weather problems in South America

Van Trump says “Soybean  bears have pushed the market down to multi-week lows as bulls patiently wait on Chinese buying. As I’ve mentioned on several occasions, China could be a big buyer of U.S. soybeans but it might not happen until U.S. prices become more competitive, which just happens to be closer to the upcoming 2020 U.S. Presidential election. I’m thinking right now U.S. soybeans are about +25 to +35 cents more than soybeans out of Brazil. Just something to consider and think about as we move forward… Also, keep in mind, Chinese buyers have a week-long new year holiday coming up and buying headlines could remain absent.”

Cattle markets were choppy last week as traders tried to digest all sorts of news surrounding trade but ended up finishing the week on a softer tone. Cash trade developed earlier in the week and ended up trading heavier volume at slightly lower levels. As mentioned last week, the cash market seems to be stalling out here and the question as to whether cash highs are in is certainly being kicked around. Although there are many, one of the larger bull stories being mulled is the global protein play. Many believe that late 2020 begins to realize the impacts on protein supplies from things such as African Swine Fever, Australian livestock losses, and more favorable export markets. The near-term bear case remains large supplies, added days on feed and lost leverage. Additionally, the fear of lost or lessened beef demand as a result of historically high beef prices and extremely wide Choice-Select spread in the 4th quarter is evident and could have damaged some out-front business. Futures closed last week slightly lower than the previous week. The mid-week sell-off seemed to surround disappointment with the phase 1 trade deal and the lack of clarity around how it may or may not impact beef markets. Futures continue to trade a tight range and show little willingness to break out. The markets are near seasonal high prices at this time and the technical risk is mounting. Bears are seemingly worn out and likely seeing some throw in the towel with every rally. Those looking for additional upside are watching weather systems and how they may drop weights through the winter. Bulls are also friendly the deferred futures because of the aforementioned protein squeeze. Looking into this week it would seem cash likely has a softer tone and beef markets are potentially steady to firm. Kills will pick back up after the holiday week and show lists are expected to print smaller. Trey Warnock – Amarillo Brokerage Company

Chinese beef importers are seeking to renegotiate prices previously agreed when they closed deals to buy dozens of shipments from Brazil because values are too high, according to a report in the online edition of a local newspaper. The website of Folha de S.Paulo reported that some Chinese importers are refusing to pay for shipments that already arrived in China, seeking a discount from Brazilian exporters. The newspaper said some of those new companies recently cleared to sell are facing financial difficulties due to the renegotiation requests from China, because they invested in new infrastructure to be able to export and are not being paid. Some Brazilian beef exporters are trying to divert cargoes that have not yet reached China to other potential destinations, such as Iran. (Source: Reuters)


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