Morning Commentary

Dec corn down 1 1/4 at $3.5325

Nov beans up 3 at $9.2325

The DOW is down

USD is stronger

Crude oil down $.16 at $43.19

Good morning,

Corn bulls are pointing to continued buying of U.S. supply by the Chinese, deteriorating crop conditions in several important areas here at home, and the funds starting to exit a larger portion of their short position.  Prior to Tues open, USDA flashed new crop sales of 408mt corn for China and 100mt for Japan. Last week’s sales report indicated new crop sales to China totaled 5.72 mln tns. Since then flashed sales to China totaled 1.008 mln tns. Therefore, US new crop sales to China total at least 6.728 mln tns. To put this in perspective, this is nearly 1.6 mln tons larger than the current record (2011/12) annual exports to China and the start of the marketing year is still a week away. At the same time, U.S. crop production estimates inside the trade are being trimmed primarily on the hard-hitting headlines that the Iowa crop has deteriorated to just 50%  “Good-to-Excellent” and a sizeable 21% of the Iowa crop now rated “Poor-to-Very Poor”. The trade seems to now be taking a national average yield of perhaps 175 to 180 bushels per acre. I’m still in and around that 177 to 178 area.” The trend for Dec corn is positive. Stable trade over 346.5 is bullish for a run towards 360+/‐. Closing under 347.5 alerts for a correction.

Soybean bulls seem to be talking very much the same language as the corn bulls, i.e. continued Chinese buying, deterioration in crop conditions here in the U.S., funds becoming more bullish, and perhaps a bit more headline interest starting to arise regarding South American weather forecasts. In above average volume, open interest rose just shy of 2,000 lots on Tuesday. Liquidation in Sep was overshadowed by gains in Nov, Jan, and May. The trend for Nov beans is positive. The market appears poised for a test of 924.75.  Stable action over 924.75 suggests a run to 950. Closing below 913 warns of a correction.

Iowa Gov. Kim Reynolds announced the additional allocation of Iowa’s funds from the federal Coronavirus Aid, Relief & Economic Security (CARES) Act of $100 million, with much of that available to assist and support Iowa’s agricultural economy, including biofuel and livestock producers, and funds to help small meat processors expand. “Iowa is at the foundation of our global food supply chain and the epicenter of the renewable fuels industry,” Reynolds said. “COVID-19 and a devastating derecho dealt a major blow to everything from the demand for ethanol to the supply of meat on grocery store shelves, but just as important are the livelihoods of thousands of Iowa farm families, agricultural industries and the communities they support. Today’s investment reflects the critical role Iowa’s ag industry has in our state’s overall economic recovery.” Iowa livestock producers are slated to receive $60 million and biofuel producers $15.5 million.(Feedstuffs)

The National Biodiesel Board is launching a campaign urging President Trump to reject gap small refinery exemption requests and uphold his commitment to the Renewable Fuel Standard. Kurt Kovarik, vice president of federal affairs, says the ads will urge farmers and biodiesel producers to contact officials in support of the industry. “Just 30 seconds at our website would allow individuals to send an email to both President Trump and EPA Administrator Wheeler voicing their concern about what EPA is up to with respect to the Renewable Fuel Standard and providing these loopholes to small refiners to skirt their obligation,” he says. He tells Brownfield action should be taken to reject the retroactive requests soon. Kovarik says in three years the EPA has granted 85 small refinery exemptions that destroyed demand for more than a half-billion gallons of biodiesel and hundreds of millions of bushels of soybeans. EPA is now considering nearly 100 new exemption petitions as producers have seen further demand destruction because of coronavirus-related travel restrictions.(Brownfield Ag)


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