Morning Commentary

March corn up 2 ½ at $3.8175

March beans up ¾ at $8.8175

The DOW is down

USD is stronger

Crude oil down $.71 at $50.24

Good morning,

Corn bulls were disappointed to see the MAR20 contract fall sub-$3.80 and the DEC20 contract fall sub-$3.90. The USDA issued a report that most inside the trade interpreted as meaning they will not be using the NEW Chinese trade deal numbers to adjust the balance sheet in next week’s report. Bulls still point to the fact U.S. corn exports have been strong and could still perhaps warrant a slight adjustment higher. Bears are pointing to rumors that China as of late has been buying quantities of Brazilian soybeans, French wheat, and perhaps Ukraine corn. Meaning the bears still don’t see China making a big effort to buy from this direction.

Soybean prices continue to chop around as traders try to gain a better understanding of the demand complications inside China. Bears are pointing to the recent rumors that China has been buying multiple cargos from Brazil and that U.S. prices are growing less competitive as new-crop supply is being harvested with good results by Brazilian producers. Bears also continue to point towards +8 to +10 million more soybean acres possibly being planted here in the U.S. this year. Bulls say it’s too early to make that type of acreage forecast, especially with some heavy flooding again being talked about for several large production areas. 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. 

China announced early Thursday that it will cut in half the duties it has in place on $75 billion in U.S. imports, including numerous agricultural products, as of Feb. 14. Beijing will cut a 10% punitive tariff to 5%, and a 5% tariff to 2.5%, according to China’s Ministry of Finance. China announced in August that it would impose tariffs in two batches in September and in December, however, the second round due to come into effect on December 15, was not implemented. The Chinese government said that the planned reduction of tariffs on U.S. products was in response to a decision by the U.S. to halve by 15% an additional tariff on $120 billion of Chinese goods to 7.5% from February 14. The announcement came amid increasing concerns over whether China can still honor the terms of the phase one trade deal signed on January 15, including a commitment to buy an additional $200 billion worth of American goods and services over the next two years. China said on Thursday that it remained committed to the eventual goal of removing all additional tariffs imposed on each other since the tariff war started in early 2018. (Source: South China Morning Post)

Meat giant Tyson said Thursday that poultry prices have been suppressed by growing U.S. chicken production, helping push the company’s chicken profit down by more than half in the latest quarter. Tyson said rising meat exports and a fast-food battle over chicken sandwiches are likely to help lift poultry demand this year. China reopened its markets to U.S. chicken late last year, and buyers there are looking for protein to supplement the country’s decimated hog herd. Tyson’s pork-export sales jumped nearly +600% in the most recent quarter, Mr. White said, helping double Tyson’s quarterly profit in pork. Meanwhile, drought in Australia has thinned Australia’s beef-cattle herds, helping Tyson’s red-meat business. The company expects restaurants and grocers to push poultry this year, “purely because of the value chicken is right now.” Poultry prices could also benefit from chicken-sandwich battles among big fast-food chains. Tyson reported a profit of $557 million, or $1.52 a share, for the company’s fiscal first quarter ended Dec. 28, up from $551 million, or $1.50 a share, a year earlier and ahead of analysts’ expectations. Sales rose 6.1% to $10.82 billion, but were below analysts’ projected $11.06 billion. (Source: The Wall Street Journal)


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