Morning Commentary

March corn down 3 ¼ at $3.905

March beans down 2 ½ at $9.07

The DOW is up

USD is stronger

Crude oil down $.32 at $55.27

Good morning,

Corn bulls were happy to see the market close at its highest level since November 1st and above all short-term resistance. Technical traders are talking about the shorter-term charts showing higher lows and higher highs and the potential for continued strength. On several occasions the MAR20 technical hurdles seem to be the $4.11^6 high posted back in mid-October and the heavy psychological resistance that has consistently been in place the past several years up in the $4.40 to $4.50 range. The bottom line, however, is the fact we still remain in this range between $3.65 and $4.10 per bushel. Also, keep in mind, we are still trading well below the 200-Day Moving Average which is up closer to $4.05 per bushel.

The EIA’s weekly ethanol data released yesterday showed a big bump in ethanol stocks to +24 million barrels up +1 million barrels from last week up over +2% from last year and again nearing the all-time record stockpile of 24.5 million estimated back in July. Keep in mind, ethanol stockpiles got down to around 20 million gallons back in November and has now snapped back aggressively higher adding almost +4 million gallons to our surplus.

Soybean bulls have struggled again this week. In fact, soybean prices are down roughly -50 cents from the highs posted on the first trading day of 2020. Lack of Chinese buying has left many bulls disappointed at the same time we are hearing about improved weather and crop conditions in South America, along with talk of +8 to +9 million more U.S. soybean acres being planted in 2020. Technically, many are thinking psychological support near $9.00 should help slow the bleeding. There’s some thought that the market will orbit this $9.00 level until it learns more specifics about Chinese buying. Bears might be a bit apprehensive to be big sellers with Chinese buyers still being talked about and yet to make a move.

The American Farm Bureau Federation wrapped up its annual convention this week in Austin, Texas, and laid out the policy changes it will pursue throughout the year from trade aid to hemp rules. Despite the recent ease in trade tension with China and other major partners, AFBF is calling for additional tariff relief for farmers and ranchers. On continuation of Market Facilitation Program payments, Agriculture Secretary Sonny Perdue said there would be a third tranche of payments under the 2019 program coming soon, but there would be no 2020 program. Still, Farm Bureau members voted to keep language in the policy book supportive of MFP. The 2020 agenda also includes support for changes to federal hemp regulations, a review of the Agriculture Department’s crop reporting system, and reforms for dairy and guest-worker policies, among other things.


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