Morning Commentary

May corn unchanged at $3.8725

May beans down 1 ¾ at $10.635

The DOW is up

USD is weaker

Crude oil down $.02 at $61.13


Good morning,

Well, it can’t go up every day.  The corn market slipped a penny in quiet, listless action.  Clearly, participants are in “hurry up and wait” mode ahead of today’s monthly USDA report.  Futures traded in a two cent range amid declining volume.  The primary question going in is how “real” the USDA will get on South American production downgrades.  Private estimates out of Argentina are centering around a low-to-mid-30’s crop versus the last USDA estimate at 39 mmt.  It may be too early for the USDA to start trimming Brazil safrinha expectations, but most feel they are too “optimistic” on the full year crop at 95 mmt?  The focus in the end will be more on world carryout, rather than domestic, with average trade guesses centering around a sub 200 mmt world corn carryout for the first time in four years.  There will be no new US production estimates, but small demand tweaks (ethanol up?) are possible.

The weekly EIA report was fairly benign for ethanol, finding slightly higher production and inventory wk/wk.  Production added 1.2% this week to 1.057 mil bbl/day, which would consume an estimated 5.7 billion bushels of corn over a marketing year.  Futures shook off the bear EIA report and relatively disappointing (confusing?) monthly export data for January.  Ethanol has done an admirable job this week catching back up with the recent run in corn.  Crush spreads have added about 3 cpg back into the mix

Yesterday’s break has the bean market correcting the recent $1.00 upswing as we battle the key trade at $10.80. Look for a further slide into the $10.45 area. Expect more liquidation in the $10.75 to $10.80 area for now. We need a close over the $10.82 ½ high to resume the rally.

Refinery and biofuel interests will return to the White House today to continue negotiations over reforming the US biofuel mandate, according to a refinery source close to the talks. The meeting initially appeared to be overtaken by the issue of President Donald Trump’s proposed steel and aluminum tariffs, but it was back on as of Wednesday, the source said. A White House spokeswoman did not immediately respond to a request for comment. It will be Trump’s fourth meeting on proposals to reform the Renewable Fuel Standard and the third in just two weeks. After the last White House meeting Thursday, senators on both sides of the issue said they would keep working toward a solution that lowers RFS compliance costs for refiners while expanding markets for ethanol. But ethanol supporters, including key Senator Chuck Grassley, Republican-Iowa, said they would not accept a bargain that trades higher ethanol blends for a price cap on RINs. (Source: Platts)

This week, the R-CALF USA Board of Directors voted unanimously to call upon President Trump to impose new tariffs on cattle, beef, sheep and lamb imported from countries that maintain substantial trade surpluses with the United States. According to R-CALF USA Board President Bryan Hanson, this action is necessary to preserve national food security interests that are threatened by a growing tide of underpriced and often undifferentiated imports. Hanson explained that just as in the steel industry, new tariffs on imported cattle, beef, sheep and lamb will help rebalance trade flows in the livestock industry, which will stop the alarming decline in the number of livestock operations and feedlots in the United States. “Since the implementation of NAFTA (North American Free Trade Agreement), the largest segment of American agriculture, the U.S. cattle industry, has shrunk at an alarming rate: 20 percent of all U.S. cattle operations have exited the industry, the nation’s cow herd shriveled to the smallest size in over 70 years, and in 2014 and 2015 U.S. beef production fell to the lowest level in over two decades,” said R-CALF USA CEO Bill Bullard. (Source: R-CALF USA)


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