Morning Comments; Tuesday, November 12th, 2019

After a weaker finish yesterday, commodity values stabilized in the overnight session. Corn, soybeans, and wheat all suffered significant losses in yesterday’s session with pressure stemming from ongoing reaction to the November WASDE report, but also from a break-down in technical support. An even greater worry for the market is the apparent stand-off in trade negotiations between the US and China. The US is now stating there will be no walking down of tariffs as previously announced. This has caused concern in the entire market, as it is unknown what either side is willing to move forward on. The longer it takes for this resolution to be made, the closer we get to the South American harvest, and the sooner China will be able to source their needs there. Without China, US soybean sales would be down 38% on the year. Typically, a weaker US dollar can generate some commodity strength, but even this has failed to help lately. These will all again be factors in today’s session. Trade will also receive the weekly export inspections for fresh news and after the close we will get the weekly crop report. Trade is expecting corn harvest near 60% and soybeans near 90%. That said, given current weather conditions, farmers may struggle to get much fieldwork accomplished this week, especially in the Upper Corn Belt. President Trump will hold a press conference on the US economy today, and there is little doubt that will have an impact on not just the financials, but all markets.

Highlights

* US/Chinese trade talks

* Next round of tariffs set to take place Dec 15th

* Chinese food inflation at 11% this year

* Favorable weather for So America

* Cold in US followed by more favorable conditions next week

* Farmers taking high interest loans to stay in business

* Large volume of soybeans in Chinese ports to be unloaded

Corn

* Brazil 42% planted

* Harvest expected to be 68% tonight

* Basis holding firm in most of Corn Belt

* Global corn supply tightens

* More reductions to demand expected

Soybeans

* Brazil 57% planted

* Forward demand low for US

* Harvest expected at 90% tonight

* Canadian canola harvest pressure

* Drier outlook for Brazil

Wheat

* Plantings questioned

* EU/Russia counter other losses

* Global wheat supply building

* Corn/Wheat spread to limit wheat feeding

* US exports remain well above last year

Livestock

* 4th quarter beef production up 88 mil pounds

* Yearly US beef production est 27.036 bil pounds

* USDA projects record pork production at 27.62 bil pounds

* 4th quarter pork production up 7.46 bil pounds

* Chinese trade relations concerning

This commentary is the sole opinion of Karl Setzer, Senior Commodity Risk Analyst for AgriVisor, LLC. 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.




 

Market Commentary provided by:

Karl Setzer Grain Commentary