Morning Commentary

Sept corn down 3 ¼ at $3.4525

Nov beans down 12 ½ at $8.4275

The DOW is up

USD is weaker

Crude oil  up $.02 at $68.74

Good morning,

Corn traders are fully digesting the Pro Farmer Midwest Crop tour results. Final tour estimates project the U.S. yield at 177.3 bushels per acre with a total crop of 14.504 billion bushels. The USDA is currently estimating the U.S. crop will yield a record 178.4 bushels per acre and produce a total crop of 14.586 billion bushels, which is actually still the smallest U.S. crop in the past three years. Also better than the past two years, is the fact ending stocks are currently estimated 1.68 billion bushels, rather than the +2.0 billion in both 2016 and 2017. Total demand remains strong and we actually planted fewer corn acres than we have the past couple of years, about -1 million fewer than in 2017, and about -5 million less than 2016. the question moving forward is how many corn acres will we plant in 2019?

Soybean prices are under increasing pressure again this morning, as bears are happy to see Pro Farmers Midwest Crop tour results showing an estimated new U.S. record average yield of 53 bushels per acre, producing a record crop of 4.633 billion bushels. The USDA is currently estimating the U.S. crop will come in at 51.6 bushels per acre and produce a total record crop of 4.586 billion bushels. The record yield was set in 2016 at 52 bushels per acre, which many bears are starting to believe we will eclipse this year. Keep in mind, while the yield was record large in 2016, we planted about -6 million fewer acres.

Lower level trade talks between the U.S. and China ended on Thursday with no major breakthrough. Meanwhile, the $16 billion in tariffs, from both sides, went into effect this week. China’s slate of tariffs targeted U.S. energy products, including butane, propane, naptha, jet fuel and coal, among other items. But because China has declined to include crude oil on the list of tariffs, for now at least, state-owned Unipec may resume buying U.S. crude in October, according to Reuters.

Cattle-On-Feed report once again shows higher “placements” than the trade was anticipating. The dry conditions in some key areas drove more lighter weights from the pastures. We have heard more talks of heavier cows going to the slaughter house and calves heading to the feedlots earlier. Official estimates showed cattle and calves on feed at 11.1 million head as of August 1, 2018. The inventory was +5% above August 1, 2017. This is now the highest August 1 inventory since the series began in 1996. Placements in feedlots during July totaled 1.74 million head, +8% above 2017. Marketings of fed cattle during July totaled 1.87 million head, +5% above 2017.

Meat glut and tariffs cut into Hormel, Sanderson results: Minnesota-based Hormel Foods Corp. cut its full-year revenue guidance by some $400 million as it copes with a glut of meat products and sales pressure stemming from retaliatory tariffs. Separately, Sanderson Farms’ CEO said high supplies and low prices for red meat this year have made it harder to get chicken featured in restaurants and grocery stores. (Source: Bloomberg)


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