Morning Comments; Wednesday, August 14th, 2019

Commodity values were mixed overnight but have stabilized from recent action. This was most notable in corn where the market has finally traded higher after posting sharp losses following Monday’s WASDE report. Whether founded or not, trade is not nearly as concerned with corn production as earlier and have removed much of the risk premium that was in the complex. December corn is now within pennies of the contract low at $3.63 though, which will be a deciding factor in how traders position themselves moving forward. Soybeans traded slightly lower overnight but were able to recover at least some of the losses that the complex has seen. An easing of trade tensions with China has benefitted the soy complex as not all tariffs will be enacted on September 1st as planned. This does not mean no tariffs will be placed on China though, which remains an issue. Chinese crush margins are improving which is also bringing thoughts we may see demand perk up, especially with the evening of values between the US and Brazil. Trade will closely monitor the ethanol data this morning to see if we continue to have stocks build. Weather and technicals will also play a role in today’s trade, as well as any shift in the outside markets.

Highlights

* US tariffs will not be placed on all Chinese products

* Financial markets rebound on tariff news

* Global economic concerns still growing

* US needs rain

* Ethanol waivers a concern for demand

* Traders continue to doubt USDA numbers

* Political developments in Argentina

Corn

* Slow farmer selling supports basis

* Ethanol profitability slipping

* China lowers production for 2019/20

* ECB production down 800 million bu this year

* Easing concerns over total production

Soybeans

* Chinese crush margins improve

* China reduces import forecast by 1.5 mmt

* Tariffs news may benefit exports

* Farmer selling up; brings hedge pressure

* US crush demand may rise

Wheat

* Trying to separate from corn

* Corn now cheaper feed grain

* Concerns over building global supply forecast

* US exports strong to start year

* Record Argentine crop

Livestock

* Cattle slaughter capacity a concern

* Adequate beef supply to finish grilling season demand

* Cheaper feed grains

* Cash markets stronger

* Hog slaughter up considerably on the week

This commentary is the sole opinion of Karl Setzer, Commodity Market Risk Analyst for AgriVisor. This is intended for informational purposes only and not to be used for specific trading recommendations. The information used to generate this commentary is gathered from a variety of sources believed to be accurate. If you have any questions or would like additional market information, feel free to send an e-mail to ksetzer@agrivisor.com. You may also follow Karl on twitter; @ksetzergrains




 

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Karl Setzer Grain Commentary