Morning Commentary

Dec corn up ½ at $3.36

Nov beans up ½ at $9.005

The DOW is down

USD is weaker

Crude oil up $.31 at $41.38

Good morning,

Corn bulls continue to believe Chinese demand could ultimately be stronger than most in the trade are anticipating. The problem is will it be enough to shake the bears? As long as we have an estimated new-crop yield of +178 bushels per acre and +2.5 billion in U.S. ending stocks it’s hard for most in the trade to imagine the Chinese buying enough U.S. corn to really scare the bears.  The trend for Dec corn is negative.  An inability to stabilize above $3.375 leaves the market vulnerable to a drop to $3.22.  Closing over $3.5025 is needed to improve the outlook. 

Soybean bulls are pointing to continued Chinese buying and the largest week of U.S. new-crop soybean sales since 2016. The argument of good demand by the bulls is being offset by bears who believe the U.S. yield is heading north of +50.0 bushels per acre. Bears are pointing to adequate rainfall in the extended forecast.  The trend for Nov beans is neutral-positive.  Stable action outside $8.83-$8.97 is needed to provide fresh trending targets. 

Dow Jones Transportation Average (DJTA) railroad components are trading lower after second quarter 2020 earnings, with CSX Corporation (CSX) and Union Pacific Corporation (UNP) beating profit estimates while coming up short on revenues. Revenues crashed around 25% year over year at both operations, highlighting a recessionary environment that may continue well into 2021. Union Pacific warned that fiscal year 2020 carload volumes will drop 10% or so from 2019 levels, while CSX warned that capital spending will come in at the “low end” of current guidance. Transportation stocks are “canaries in the coalmine” for the U.S. economic outlook, with shipping volume rising during periods of expansion and shrinking during recessions and downturns. Analysts expect similar reports from other transportation companies in coming weeks, highlighting the ongoing impact of the pandemic.

Senate Agriculture Appropriations Subcommittee Chairman John Hoeven, R-N.D., told DTN on Wednesday he believes the Senate coronavirus aid package will contain about the same amount of money for agriculture programs as the House HEROES Act, but the nutrition provisions will be up to the top Senate leadership. In a telephone interview, Hoeven said USDA can start with the $14 billion that was previously allocated to the Commodity Credit Corporation and Congress will bump that up so USDA has about $33 billion to $35 billion in additional money for farmers. Hoeven said, by his calculations, the HEROES Act passed by the House in late May contains about $68 billion for agriculture and nutrition and $33 billion of that — including the $14 billion in CCC money — is for aid to farmers and ranchers. USDA could not use the $14 billion until July 1 but can now use that money to pay out the rest of the $16.5 billion promised to farmers and ranchers under the Coronavirus Food Assistance Program (CFAP), Hoeven said.(Progressive Farmer)

USDA’s monthly livestock data shows commercial pork production during June was a record monthly high. That followed a couple of months of dramatically lower production as several major plants either closed or reduced hours to fight COVID-19 infections. The USDA says pork production during June 2020 was 2.400 billion pounds, up +14% from June 2019 with a +12% jump in the slaughter to 11.177 million head and a +3 pound gain in the average live weight at 288 pounds. Commercial beef production was 2.374 billion pounds, +7% above the year before with a +2% increase in the slaughter to 2.876 million head and a +52 pound gain in the average live weight at 1,365 pounds. The monthly red meat production total of 4.792 billion pounds was +10% more than the previous year, with the year to date total now at 26.824 billion pounds, slightly ahead of last year’s record pace.


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