Corn: 1 to 2 Cents lower
Yesterday, the corn market had a China-based premium to the price. Positive expectations have prompted funds to reduce their corn position, but not a lot of details have surfaced about the trade deal. There is some talk this morning about China importing ethanol, but they would first need to remove tariffs on fuel.
Last week, U.S. corn export inspections were at a marketing-year high, but still below the 38.4 mil bu/week average. Cumulative exports are down 55% from last year at this time. This morning, corn is trading lower and we will be watching to see if funds continue to cover their short position. Bulls remain hopeful that the USDA will reduce corn yield estimates by 1 to 2 bu./acre in the January report.
Beans also rallied yesterday on fund short-covering as trade ignored the NOPA crush report relative to trade expectations. NOPA reported a crush of 165 million bu., and that is 7 million short of trade expectations. Demand on world meal is still solid and there are expectations that U.S. and Brazil will benefit from rising Argentine export taxes. Weakness in the meal market and strength in bean oil is causing soybeans to trade steady this morning. Now that the Phase One trade deal appears to be done, traders are watching closely for any follow-through of fund short covering.
The Annual Meeting is tomorrow in Ames. Registration is at 9:00 am with the meeting starting a 9:30 am.