Morning Comments January 16, 2020

Winter Bales

Opening calls:
Corn 3 to 4 lower
Beans 2 to 4 lower 

The Phase 1 U.S.-China trade deal was signed yesterday which seems to have led to a buy the rumor sell the fact scenario in corn and beans. The agreement does not outline any near-term deadlines for purchases and there is uncertainty around if corn will be one of the commodities purchased. What we do know from the agreement is that over the next two years China will buy an additional $32 billion for their ag commitment with a pledge to buy an additional $5 billion worth of agricultural goods depending on “market conditions”. The trade has taken this to mean if the U.S. is the cheapest option, so this additional amount is being met with skepticism. Corn was unable to push through resistance at $3.92 yesterday which also contributed to some selling. As I have been stating in earlier comments the trade is also concerned on the potential for 94 million acres of corn to be planted in the U.S. this spring.

On soybeans, with the deal signed there is optimism that China will return to buying beans from the U.S. with some analysts looking for a 40-70% increase on the volume that was purchased in 2017. However, U.S. beans are still more expensive than South America right now and the trade will need to see China buying before they get too excited. 

Your local Grain Marketing Advisor can assist you in developing a marketing plan through several contract options to help manage risk and maximize rewards for your operation. We’d like to encourage you to learn about our 2020 Averaging Contracts if you haven’t used them in the past. 

Looks like the weather will be bitterly cold for a few days, and treacherous tomorrow, please be safe.