Morning Commentary

Dec corn up 3 at $3.435

Nov beans up 6 at $9.1075

The DOW is up

USD is weaker

Crude oil up $.34 at $42.68

Good morning,

Corn bears are talking about improved rainfall chances in the forecast for parts of the corn belt as two hurricanes approach the Gulf. The follow through of the storms could improve moisture profiles in the days and weeks ahead. Bears are also thinking we could soon start to battle more harvest pressure as the crop advances and the harvesting down south starts to move more quickly to the north. Bulls continue to point to Chinese demand and the idea that they will continue to purchase U.S. supply. Bulls also believe the USDA’s current yield forecast is overly optimistic at 181.8 bushels per acre. . The Pro Farmer Crop Tour last week culminated with the group forecasting a final U.S. average yield of 177.5 bushels per acre and total production of 14.820 billion bushels, or about -458 million bushels less than the USDA’s current forecast of 15.278 billion bushels. The Pro Farmer Tour is estimating Iowa at 180 bushels per acre. The trend for Dec corn is positive. A close over 346.5 is bullish. Closing under 329.75 is negative. In Line with the trade count, Friday’s COT report showed funds short 133,000 lots versus 194,000 the week prior.

Soybean traders remain heavily focused on U.S. finishing rains and Chinese buying. Bears believe the USDA is fairly close with its current record-setting yield forecast of 53.3 bushels per acre and 4.425 billion bushels in total supply if the U.S. rains are delivered as forecast. Bears also doubt the Chinese will do much heavy U.S. buying ahead of the upcoming U.S. election. Last weeks Pro Farmer Crop Tour produced a national average yield forecast of 52.5 bushels per acre and a total U.S. crop of 4.362 billion bushels or about -63 million bushels below the current USDA forecast. The state breakdown estimated Iowa averaging 55 bushels per acre. The trend for Nov beans is positive. Stable action over 913 encourages a run to 924.75. Closing below 898 warns of a correction. 45,000 contracts more long than expected, Friday’s COT report showed funds long 68,000 lots versus short 8,000 the week prior.

USDA’s Cattle on Feed report showed inventory for feedlots with capacity of 1,000 head or more totaled 11.3 million head on August 1, 2020, a +2% increase from August 2019 and the highest August inventory since the series began in 1996, according to the USDA. The result was about +1% higher than analysts expected. Placements during July came in at 1.89 million, +11% higher than last year and well above estimates for around a +6% increase. Marketings during July totaled 1.99 million head, -1% below 2019 and right at expectations. 

Deere & Co, the world’s largest farm equipment maker, lifted its full-year earnings forecast on Friday after a smaller-than-expected decline in quarterly profit, as the sector benefits from replacement demand and government stimulus. The Moline, Illinois-based company said it now expects net income of about $2.25 billion for the full year, higher than $1.6 billion to $2 billion estimated earlier. Profit for the latest quarter came in at $2.57 per share — an 8.5% year-on-year decline compared with a 55% drop expected by analysts in a Refinitiv survey. Similarly, equipment sales fell 12.4% year-on-year to $7.9 billion, lower than Wall Street’s estimate of a 25.3% decrease. Sales of tractors and combines for the year are expected to be down -10%, compared with a -10% to -15% drop estimated in May, helped by improved demand in North America and Asia. Construction and forestry machine sales are estimated to decline an annual -25%, lower than a -30% to -40% fall forecast earlier. (Source: Fox Business)


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