Morning Commentary

Sept corn down 1 ¾ at $3.5075

Nov beans down 6 ½ at $8.6375

The DOW is up

USD is stronger

Crude oil down $.20 at $67.67

Good morning,

Corn bears continue to point towards a record U.S. yield as private crop tours across the country are confirming large USDA estimates. From a traditional balance sheet perspective, bears want to argue that a yield north of 180 bushels per acre will start to bring back debates about a +2.0 billion bushel carry. Bears are also talking about more corn acres in Argentina being planted and perhaps a substantial jump in U.S. corn acres for 2019. The Pro Farmer Crop Tour finished their third leg last night and released estimates for Illinois and western Iowa. The results for Illinois show an average yield of 192.63 bushels per acre, up substantially from last years 180.72 estimate. The USDA is currently forecasting the Illinois crop at 207 bushels per acre vs. 201 average yield harvested last year. Western Iowa showed some big numbers to the West and Northwest, both regions up over +4% from last year. On the flip side, the Southwest region of the state showed yields down over -3% compared to last year. The rest of the state will be reported tonight. The short term trend for December corn is negative.  The near term target is 364.75.  Consecutive closes below 364.75 would signal a drop to 350.25 perhaps 345.5.  A close over 376 is constructive.  Short December corn, system traders will find buy stops around 373.75.  Down four consecutive sessions, Dec corn hasn’t closed lower for five straight days since June 19th.

Soybean bears continue to talk about cooperative weather across most of the U.S., basis bids weakening and drying up across the country, and longer-term fears and uncertainty surrounding Chinese demand. Not only is there fear surrounding trade negotiations, but there is more nearby fear surrounding weakening hog prices both here at home and in China. The fear in China is that a spreading African Swine Fever disease has already prompted over 20,000 pigs to be culled and is promoting many smaller producers to flood the slaughter market with supply in fear the government might find similar problems or contagion in their stock. The Pro Farmer Crop Tour posted results for the third leg of their tour: Illinois’s average soybean pod estimate for a 3×3′ area was forecast at 1328.91, up +6.6% from last year’s 1230.77 average pod count. The USDA is currently forecasting the Illinois average soybean yield at 64 bushels per acre vs. 58.0 last year. The Western Iowa numbers were released, with the tour forecasting the 3×3′ average pod count higher in all three regions. In fact, up +27% from last year in the Southwestern portions of the state. The Western and Northwestern portions of the state seem to be up +10% compared to last year.  The technical trend for Nov beans is negative.  The short term target is 861-3.  A close over 891.25 would be constructive.  Short November beans, system traders will find buy stops around 886.5.  Down two consecutive sessions, Nov beans haven’t closed lower three days in a row since July 11th.

485.007 million lbs. of beef were in frozen storage at the end of July, up 12% from year-ago levels and up 8% from the end of June. I’m told that frozen poultry stocks increased in July, climbing to 1.471 billion lbs., a 1% increase from June 30 and a 5% rise versus year-ago. Pork stocks managed to finish at 548.053 million lbs. in the nation’s freezers as of July 31, which represented a 1% decline from year-ago and a 2% drop from the end of June.


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