Morning Comments December 27, 2018

Good morning!


After a poor close yesterday, corn and soybeans are trading slightly higher this morning.


At the break this morning corn is up 2-3 cents, recovering nearly half of yesterday’s losses and soybeans up 3-4 cents.


There were a few key items weighing on corn markets yesterday. Funds were sellers of corn contracts on profit taking, concerns about the potentially large South American crop and no signs of any Chinese interest in U.S. corn. South American weather continues to improve with much needed rain moving into the driest parts of Parana, the major producer of corn in Brazil, accounting for 25% of the first-crop production. Their crop will be pollinating over the next few weeks and rainfall will be critical during this period. The weekly export report released yesterday mid-morning, delayed from Monday, came in right in the middle of trade expectations. Corn shipments were the best in three weeks, though below the average needed to reach the USDA’s export projections. It doesn’t look like the corn market is going to have a lot of news to move prices into the end of the year; it will likely just depend on whether or not the funds decide to adjust their positions.  They have carved out a large long position and will need some new demand news before having much interest in adding to those positions.


The main news driving the soybean market sharply lower yesterday was again profit taking by funds, good South American weather forecasts and disappointing demand. Export demand came in at just 24 million bushels, the lowest weekly inspection number since late September. This year’s exports are down a whopping 42% from a year ago. It is going to take some major unexpected additional Chinese soybean purchases or a friendly USDA report in January for the bean market to get much going on the upside. Given that the U.S. soybean stocks are record large and the next Brazilian soybean harvest is fast approaching, it is tough to get too excited about buying the soybean market and we would definitely see any rallies as selling opportunities.


Have a great day!