Morning Commentary

March corn down ¾ at $3.80

March beans up 3 ¾ at $8.8375

The DOW is up

USD is weaker

Crude oil up $.06 at $50.81

Good morning,

Corn traders are starting to prepare and make adjustments ahead of next Tuesday’s monthly USDA supply and demand report. On the demand side of the equation, bulls are hoping to see the USDA bump exports a bit higher as U.S. exporters look to remain highly competitive in the global marketplace. There’s a ton of debate about how the USDA is going to handle or interpret the “Phase 1” trade agreement, will the Chinese promises somehow be counted into the equation or will the USDA wait until it sees more real confirmation. As for ethanol demand, it feels like most in the trade are thinking the USDA will leave it “unchanged”. The USDA just made a large adjustment higher in January for feed and residual demand so it’s doubtful the USDA makes another quick move, but if global livestock and protein demand is going to stay strong I have to imagine feed usage eventually ticks higher later in the year.

Soybean traders are currently debating Chinese demand, South American production, and next Tuesday’s monthly USDA supply and demand report. The Chinese headlines have somewhat improved on rumor and talk of an unconfirmed treatment for the coronavirus, but this situation is still extremely fluid and a major “wild-card”. South American weather has been mostly cooperative and crop estimates seem to be working themselves higher not lower. The harvest in Brazil is moving along and its exporters will soon be gaining even more competitiveness. In fact, there were several reports and rumors circulating yesterday that Chinese importers like Cofco, Sinograin, and Wilmar have all been buying heavy doses of soybeans from Brazil the past few days. Here at home, the USDA is scheduled to release its latest supply and demand report next Tuesday, February 11th. The trend is bearish but the market is oversold and momentum is turning up.  Stable action over 901.5 confirms an end to the washout.  Sustained trade below 867.5 projects a target 850.25. 

U.S. net cash farm income will fall -11% this year as production costs rise and government aid programs set up to assist producers during the U.S.-China trade war wind down, according to a U.S. Department of Agriculture forecast issued on Wednesday. The drop, of $13.1 billion in inflation-adjusted 2020 dollars, is expected as direct government farm payments are projected to plummet -36.7% following an estimated decline in payments from the Trump administration’s trade aid programs. Data show struggles in the U.S. agricultural economy will continue as farm bankruptcies rise and producers face ever-mounting farm debt, prolonged low commodity prices, volatile weather patterns and a fatal pig disease that has decimated China’s herd. However, net farm income is expected to tick up +1.4% in 2020, after adjusting for inflation, Litkowski said. The difference between net cash farm income and net farm income is based on how the agency accounts for farm income. Net cash income is recorded in the year a commodity such as corn, soybeans or pork is sold. Net farm income is for the year it was produced, and factors in such things as depreciation of assets, including farm equipment. Livestock farmers are expected to sell more animals and meat this year at higher prices, according to the USDA. But crop producers face a more complicated picture: corn growers are expected to get lower prices, and soybean growers could struggle with sales due to lower demand. (Reuters)

A cattle virus, first identified in Japan in 2003, has just been confirmed in U.S. cattle. News of the finding was published in medical journal, “Emerging Infectious Diseases.” The virus is called “bovine kobuvirus” (BKV), and it is in the same family as viruses that cause head colds and sinus infections in humans, as well as polio. Researchers discovered it in the intestines of two calves that died after being infected. Leyi Wang, who led the study that confirmed the finding at the University of Illinois, urges continued surveillance to determine how widespread the virus might be in the U.S. The Centers for Disease Control and Prevention (CDC) reported that after initially identifying BKV in Japan in 2003, the virus has since been reported in Thailand, Hungary, the Netherlands, Korea, Italy, Brazil, China and Egypt. Researchers haven’t determined whether the cattle virus can be transmitted to people.(DTN)


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