Morning Commentary

Sept corn down 1 at $3.265

Nov beans up 1 ¾ at $8.9725

The DOW is up

USD is stronger

Crude oil down $.33 at $41.57

Good morning,

Corn traders continue to debate U.S. yield. Bulls want to talk about a yield closer to 175 bushels per acre, while bears want to talk about a fresh new all-time record U.S. yield of +180 bushels per acre. Bottom line, regardless of the camp you find yourself, everyone on both sides of the debate seems to be in agreement that we are going to have a strong crop. The trend for Dec corn is negative. An inability to reassert above 337.5 leaves the market vulnerable to a drop to 322. Closing over 350.25 is needed to improve the outlook. Based on the trade count, non‐passive funds are thought to be short 165,000 corn on a futures and options basis.

Soybean bulls continue to point to improving Chinese demand and a much weaker U.S. dollar. Bears are talking about mostly cooperative U.S. weather, an average U.S. yield estimate working its way north of +50 bushels per acre, and increasing tensions between U.S. and Chinese leaders. In slightly below average volume Wednesday, open interest was little changed. The trend for Nov beans is neutral-positive.  Stable action outside 883‐897 is needed to provide fresh trending targets. Based on the trade count, non-passive funds are thought to be long 61,000 beans on a futures and options basis.

The U.S. Court of Appeals for the Ninth Circuit denied a petition to vacate the registration of Corteva Agriscience’s Enlist Duo herbicide, a 2,4-D-choline and glyphosate premix designed for use over 2,4-D-tolerant Enlist crops. The court ruled that EPA only needed to fix one oversight with the Enlist Duo registration regarding the herbicide’s risk to monarch butterflies. The herbicide’s registration will remain intact in the meantime. The decision in Enlist’s favor will come as a relief to many in the agrichemical industry, which is still reeling from a recent Ninth Circuit court decision vacating three dicamba herbicides, based on a similar lawsuit from many of the same plaintiffs as this Enlist lawsuit.

America’s frozen pork inventories were down -25% from a year earlier at the end of June, the U.S. Agriculture Department said on Wednesday, after outbreaks of the coronavirus among meatpacking workers slowed production. The USDA said in a monthly report that there were 464.373 million pounds of pork in cold-storage facilities on June 30, down from 467.927 million the previous month and 619.454 million a year earlier. Processors and exporters drew down supplies of frozen meat during the plant disruptions, rather than making new purchases at high prices, according to economists. The drawdown in frozen pork in June was the smallest for the month since 1970, said Rich Nelson, chief strategist for commodity broker Allendale. The -3.5 million pound decline was smaller than the typical 30-million pound decrease for that period, he said. U.S. pork production increased about 6% from a year earlier as plants recovered from the disruptions in June because there were a large number of hogs to slaughter, Nelson said. Total red meat supplies were up +1% from the previous month but down -12% from last year. Beef supplies were up +3% on the month but down -6% from last year. Poultry supplies rose +4% from the previous month but were down -3% from 2019 levels. Total stocks of chicken were down slightly from the previous month but up +2% from last year. Total pounds of turkey in freezers were up +13% from last month but down -12% from June 30, 2019. (Sources: USDA, Reuters)

The U.S. Department of Agriculture released its long-awaited report on the impact of the 2019 fire at Tyson Foods’ Holcomb, Kan., beef plant and impact of the COVID-19 pandemic on beef price margins. The report failed to identify wrongdoing by market participants but did offer suggestions on how to improve transparency in the market and create additional opportunities for small and local processors. The agency added, “Findings thus far do not preclude the possibility that individual entities or groups of entities violated the Packers & Stockyards Act during the aftermath of the Tyson Holcomb fire and the COVID-19 pandemic. The investigation into potential violations under the Packers & Stockyards Act is continuing.” The North American Meat Institute (NAMI) pointed out that the report found no wrongdoing. “In its analysis of the effects of the fire and the pandemic, USDA found no wrongdoing and confirms the disruption in the beef markets was due to devastating and unprecedented events,” NAMI president and chief executive officer Julie Anna Potts said.

U.S. railroad operator CSX Corp. reported on Wednesday a drop in quarterly profit after cost controls failed to offset a -20% volume slump from the COVID-19 pandemic. The Jacksonville, Florida-based company, considered one of the most efficient U.S. railroads, reported second-quarter net income of $499 million, or 65 cents per share, down from $870 million, or $1.08 per share, a year earlier. The railroad slashed costs, in part, by reducing employee overtime during the quarter. Revenue tumbled -26% – the largest decline in company history – to $2.26 billion after the automotive segment led across-the-board declines. The company says while business has been recovering since the nadir in May, raging infections in key states – including Florida, Texas and California – are raising economic risk. (Source: Reuters)


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