Morning Commentary

Dec corn up 3 at $3.5725

Nov beans up 10 ¾ at $9.35

The DOW is down

USD is stronger

Crude oil down $.18 at $43.21

Good morning,

Corn traders are debating U.S. rains and Chinese buying. Bulls are pointing to comments from some forecasters that upcoming Iowa rains might bring less than hoped for. Bulls are also pointing to talk and headlines out of China that they will more than likely continue buying U.S. corn. The question is in what capacity, i.e. how much and how soon? Moral of the story, total U.S. crop production has obviously backpedaled on weather hiccups in several key regions, and at the same time, Chinese buyers continue to sniff around in the U.S. corn market. These two big changes in the headlines along with the weaker U.S. dollar and more accommodative commodity landscape has forced the funds to exit a majority of what was once a massive short position. Moving forward the trade will need to find the fresh headlines to keep bulls engaged and fed and able to attract new money flow to keep prices moving higher. The trend for Dec corn is positive. The market is poised for a run towards 360+/‐. Closing under 347.5 alerts for a correction.

Soybean traders are talking about the same thing as corn traders, i.e. continued U.S. weather uncertainties and Chinese buying. There have been some headlines out of China recently that President Xi has been urging consumers to conserve food and do their best to limit waste. Bulls believe that plays right into arguments weeks ago that China was starting to battling a major food inflation problem and will have no choice but to be buyers of U.S. supply, Many inside the trade are thinking the Chinese will be importing a record amount of soybeans, some bulls think it could end up being close to 98 to 100 MMTs, with perhaps +40% of those imports coming from the U.S. The trend for Nov beans is positive. The market achieved our target at 924.75 on Aug 25th. Stable action over 924.75 suggests a run to 950. Closing below 910.25 warns of a correction.

The U.S. Department of Agriculture (USDA) is extending the deadline to November 20, 2020, for the Soil Health and Income Protection Program (SHIPP), a new pilot program that enables farmers to receive payments for planting perennial cover for conservation use for three to five years. Through SHIPP, producers can apply for three-, four-, or five-year CRP contracts to establish perennial cover on less productive cropland in exchange for payments. This pilot enables producers to plant perennial cover that, among other benefits, will improve soil health and water quality while having the option to harvest, hay, and graze outside the primary nesting season. Producers can enroll up to 50,000 acres in the program.

The Environmental Protection Agency has not made a decision on U.S. biofuel blending requirements for 2021 or on petitions from refiners asking to be exempted from past-year requirements going back to 2011, EPA Administrator Andrew Wheeler said on Wednesday. Wheeler could not assure that the agency will decide the 2021 Renewable Volume Obligations (RVO) by the Nov. 30 deadline due to the impact of the COVID-19 pandemic, saying the agency hopes to have a decision as soon as possible. He added that the agency is weighing 67 pending petitions from refiners, asking to be exempted from obligations for years covering 2011-2018. In January, an appeals court ruled that waivers granted to small refineries after 2010 had to take the form of an “extension.” Most recipients of waivers in recent years have not continuously received them, casting doubt on the program. (Source: Reuters)

Iowa ag economists who are looking into their crystal balls are finding what could amount to a challenging year in 2021 for farmers. While land prices are expected to slightly improve, farm concentration is expected to continue, big crops are seen pressuring prices, input costs are seen as going higher, and more problems are seen for farm loans. During a webinar Tuesday, a panel of Iowa State University (ISU) Extension economists did share some good news: China and the U.S. cannot do without each other. For that reason, the biggest buyer of U.S. ag products is expected to remain a large customer. In addition to China’s insatiable appetite for soybeans, U.S. corn and soybean product exports are growing into other parts of world, the economists say. Wendong Zhang, ISU Extension economist, says a lot is hinging on the amount of government payments as well.


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