Morning Commentary

Dec corn up ½ at $3.53

Nov beans down ¾ at $8.3925

The DOW is up

USD is stronger

Crude oil down $.77 at $69.60

Good morning,

Corn bulls are scratching their head as the USDA catches the trade by surprise, raising their record August yield estimate of 178.4, even higher to 181.3 bushels per acre. In the stroke of a pen or tap on the keyboard this added another +241 million bushels to total U.S. production, which is now forecast at 14.827 billion bushels. Among the major producing states where yields are forecast to be record high are: Illinois, Iowa, Nebraska, Indiana, Ohio, and South Dakota. If there was good news to digest, again it all came from “demand”. Feed and Residual was raised higher by +50 million bushels; Exports also raised higher by +50 million bushels; Ethanol raised higher by +25 million bushels. Unfortunately, the jump in demand just isn’t enough to offset the jump in yield, hence, total ending stocks are raised higher by +90 million bushels to 1.774 billion. .  The short term trend for December corn is bearish.  A close under 350.25 prompts further downside expansion and, at minimum, a test of 344.5-340.  A close over 361.75 warns of corrective action.  Given a sell signal in Dec corn following the report, system traders will find buy stops around 366.5. 

Soybean bulls see the balance sheet expand, as the USDA bumps their new-crop yield estimate to a fresh new record high, from 51.6 to 52.8 bushels per acre, adding another +107 million bushels to total U.S. production. On the demand side of the equation, exports were left “unchanged”, while “domestic crush” was raised higher by +10 million bushels. In summary, total U.S. ending stocks were bumped higher by +60 million bushels from 785 million to massively burdensome 845 million bushels. Global soybean production was increased +2.2 million tons, with larger crops for the U.S. and China that are partly offset by lower projections for Canada, India, and Uruguay. China’s 2018/19 soybean imports are reduced -1 million tons to 94 million as slower growth in protein meal demand and lower crush in 2017/18 continues into the next marketing year. Global 2018/19 soybean ending stocks are projected +2.3 million tons higher, with increased stocks for the U.S. and Argentina that are partly offset by reduced stocks for Brazil. The technical trend for Nov beans is bearish.  A close under 821.25 leaves the market vulnerable for a drop to 810.50.  A close over 859.75 warns of a change in trend.  Short November beans, system traders will find buy stops around 847.25. 

China has slashed its forecast for 2018/19 soybean imports as farmers reduce their use of the soybean in animal feed because of the Sino-U.S. trade conflict, leading the government to raise its supply deficit estimate. Imports of soybeans in the crop year that starts on October 1 will be 83.65 million metric tons, down 10.2 million metric tons form last months’ estimate of 93.85 million metric tons according to the Ministry of Agriculture and Rural Affairs in their monthly crop report. They are saying its because they are feeding lower protein livestock and poultry feed. But in actuality this is the first officials assessment by China on the impact of the trade war. (Source: Reuters)

China has banned the transport of live hogs and pig products form 10 regions bordering the six provinces that have reported Africa swine fever outbreaks in recent weeks. Live markets will also be shut in the regions. The 10 areas under the new ban slaughtered a combined 217 million hogs in 2016, around one-third of the country’s total. Hearing that these new measures are incentivizing illegal movement of pigs by farmers and traders who are struggling to maintain their livelihoods. (Source: Bloomberg)


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