Morning Comments January 31, 2019

Agriculture Cereals Corn 1242 Pixels Free To Use

Opening Calls:

Corn steady to 1 lower

Beans 1 to 2 higher

 

Uncertainty remains the main driver of market direction for the time being. Uncertainty about 2018 U.S. crop size. Uncertainty about U.S. and Chinese relations, on many fronts. Uncertainty about demand. Uncertainty about potential crop size and effects of weather in South America. Some of this uncertainty will disappear next Friday, Feb. 8th with the release of USDA reports. The Jan. 11th Crop Production for 2018, and Stocks reports will be released along with an updated WASDE. For corn, most traders expect a decline in yield, acres and ethanol demand, and much better exports. The net effect of all of this puts expectations for the ‘18/’19 carryout somewhere between 1.65 and 1.70 billion bushels vs. the 1.781 billion we saw in the last report. Keep in mind, that much of this is already built into the current futures prices. Any deviation from these expectations should move the market somewhat. We continue to encourage producers to get some offers in ahead of this report.

 

On the soybean front, the uncertainty about crop size in South America and the ongoing issues with U.S. and China relations does not appear to be going away any time soon. There is an improved weather forecast for both Brazil and Argentina, with thoughts of a crop somewhere between 114 and 116 Million Metric Tons. This is down from the record large expectation of 120 MMT, but is still a big number. Trade talks are slated to begin today with representatives from China and the U.S. negotiators. There are many rumors about being close to an agreement on many items, but the main sticking point continues to be the major difference of opinion regarding Intellectual Property rights.

 

Temperatures have improved, but it is still dangerously cold this morning. Please continue to take proper precautions, and be safe. Warmer weather is coming soon.

Have a great day.