Morning Commentary

May corn down 6 ½ at $3.695

May beans down 17 ½ at $8.7375

The DOW is down

USD is weaker

Crude oil down $9.81 at $31.46

Good morning,

Weakness in crude triggered a global market meltdown. Compounding maters, funds were significantly less short than expected in beans, meal, and corn. The market, more than ever, needs a lifeline from China.

Corn bulls give back last week’s gains as macro markets meltdown in the face of further fears surrounding coronavirus and the fallout in crude oil. There are more rumors and talk of the Chinese sniffing around for U.S. DDGs, sorghum, spring wheat, etc as reasons to be optimistic, but the market simply doesn’t care. The negative headlines and fear surrounding corona and the massive setback in crude oil prices are simply too overwhelming and causing a massive broad-based selloff. As long as the coronavirus headlines remain in the market and projected ending stocks +2.5 billion bushels the bears will remain in charge.

Soybean bulls are facing the pain associated with the major “risk-off” market mentality. There’s a four-day strike brewing in Argentina, and could also argue more rain is needed in some areas, but the market doesn’t care…it’s currently all about corona and crude oil.  The MAY20 contract traded to lows in the overnight session not seen since mid-May of last year.

China’s soybean imports in the first two months of 2020 jumped +14.2% year-on-year, official customs data showed on Saturday, as cargoes from the United States booked during a trade truce at the end of 2019 cleared customs. The country brought in 13.51 million metric tons of the oilseed in January and February, up from 11.83 million metric tons a year earlier. Customs said last month it would combine preliminary trade data for January and February instead of releasing data for individual months. Early-year data in China is typically distorted by the week-long Lunar New Year holiday, while this year the coronavirus epidemic has also widely disrupted business. Crushing rates are expected to start gradually picking up as the virus containment measures ease amid falling rates of infection within China. (Source: Reuters)

The U.S. Department of Agriculture said on Friday it will prohibit shipments of all pigs for at least three days if the nation ever finds a case of African Swine Fever. The federal government is preparing to contain and eradicate African swine fever if it spreads to the United States to avoid the type of devastation seen in China, where the disease has reduced the herd by more than 40%. Since the China outbreak, African swine fever has broken out in 10 countries in Asia. With no vaccine or cure available for African swine fever, experts recommend that infected pigs and others housed in the same barn be culled. The USDA said the best options for disposing of dead pigs would be to bury them on farms or turn them into compost. “USDA plans to pay for virus elimination at a uniform, flat rate, based on the size of affected premises,” the agency said. (Source: Reuters)

The right-to-repair movement has come to the heartland, where some farmers are demanding access to the software that runs their equipment. At stake for Deere & Co. and other big manufacturers is the free rein they’ve had to remake farming with data and software. The transformation has helped U.S. farmers increase productivity, but at the cost of a steady shift in operational control from farmer to machine. One of the world’s oldest and most hands-on occupations has literally become hands-off. These machines have been meticulously programmed and tested to minimize hazards and maximize productivity, Deere says, and it’s all too complicated for farmers to be getting involved in. There’s also a more obvious motive for protecting proprietary software: money. Historically, the healthy profit margins of the parts and services units have helped smooth out earnings when demand for machines is down.  For Deere and its dealerships, parts and services are three to six times more profitable than sales of original equipment, according to company filings. For those pushing back against access restrictions, the notion that farmers can’t work on their own tractors is an affront to the rugged individualism that built America. (Source: Bloomberg)


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