News Source: SETZ

Morning Comments; Wednesday, November 20th, 2019

Corn, soybeans, and wheat all finished yesterday’s session on the positive side as light buying surfaced in each commodity. This was mostly from technical short covering as fundamentally, nothing has changed in the market. We are seeing some demand build on corn though, which is a good sign. There are a few reasons for this demand, with the fact corn values have been on a consistent down move being a primary one. Another reason may be the low test weight being reported on this year’s later harvested bushels. We could be seeing a sudden increase in exports as buyers want to secure as much old crop as possible before this corn makes it into the supply line. This is not uncommon in year’s with suspect quality. The fact we are seasonally at a point where demand does increase is also positive for corn exports. That said, we have a lot of lost ground to cover before corn demand can be considered bullish. Wheat also benefitted from technical buying as the contract dipped to major resistance. Soybeans are the commodity that needs to be closely monitored from a technical side as the January contract has formed a double bottom at the $9.10 point, which was also the overnight low. Trade will again focus on all these topics today, as well as any fresh news on US trade developments.

Highlights

* South Africa too wet to plant

* US crop quality becoming a concern

* Lower values starting to spark demand

* Argentine corn planting 44% complete

* Trade showing concern over Dec 15th tariff deadline

* Buyers showing interest in outside markets

* US domestic usage margins improve

* New crop corn/soy ratio at 2.47:1

Corn

* Buyers surfacing on breaks

* Ethanol margins improve

* Yearly corn sales 3rd lowest in history

* Brazil corn sales 2x US per week

* Corn test weight a concern

Soybeans

* Delays noted to Chinese unloading

* Harvest pressure lifting

* Crush margins generate demand

* Global oilseed market rallies

* SAM weather improves

Wheat

* Winter wheat rating under year ago

* Winter wheat planting pace on average, no acreage concern

* Buyers concerned over quality of US crop

* Technical support forming

* Yearly sales +21%

Livestock

* Very light cash cattle trade

* Record US hog production

* Hog weights rising

* COF report this Friday

* Hogs backing up in pipeline

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.

Closing Comments; Tuesday, November 19th, 2019

Grain and soybean values posted a recovery today as buyers surfaced in the market. Most interest was on corn where another flash sale of 191,000 metric tons to an unknown buyer was announced. This was the second sale in two days, showing us the recent break in futures has generated demand. Building concerns over drier weather in South America were also supportive to today’s trade. Reports of low test weights and quality issues in the Western Corn Belt increased today, which could become a factor for the export market in the future.

Even with this week’s flash sales, global demand for US corn is a concern. Current US corn sales are the 3rd lowest for this point of the marketing year in history. The main concern is that our traditional buyers have been bypassing us in the market. These include South Korea where sales are down 96%, Japan is down 56%, and Mexico is down 17%. The question is how much of this corn demand has already been satisfied from other sources.

A factor with this year’s corn crop that is receiving more attention is quality, mainly test weight. Reports of low test weights on corn are building, mainly in areas where the growing season came to an early end. Terminals have even went as far as setting a minimum on corn test weight and turning away bushels that are substandard. The question now is if this will impact our export demand as the marketing year progresses, and possibly what it could mean for domestic demand as well.

Even though it is old news, trade is starting to question the soybean crush volume that was predicted in the November WASDE report. The USDA predicted a yearly crush of 2.1 billion bu, which was 15 million bu less than the previous estimate. Soybean crush margins have improved in recent weeks though, and the NOPA usage number for October was a record. This would indicate the USDA may have been premature in lowering its crush estimate, and we could easily see an increase in future balance sheet reports.

Once again, trade is starting to focus on South American weather. Conditions have turned drier in Brazil and Paraguay, and while not at a point where yield is being impacted, they do warrant the addition of risk premium. This is especially the case after the drop we have seen in futures in recent days. Argentina also remains drier than usual for this time of year. All these regions do have precipitation forecast, but some events are a few weeks out. By then, we could see production impacted.

The propane situation in the Western Corn Belt remains a market topic. Shortages of propane continue to be reported, but this is mostly from a logistic situation. To alleviate this, waivers have been granted to truck movement of propane in Iowa, Minnesota, Wisconsin, and North Dakota. The issue with propane is that a wetter than usual crop is being harvested that needs to be dried at the same time the first cold snap of the year elevated residential demand. One positive side of this situation is that propane values are still 22% less than a year ago.

A situation is developing in Canada that could end up supporting the US export program. The Canadian National, or CN railroad in Canada has a strike taking place. Of the CN’s 25,720 employees a reported 3,000 are striking. The striking CN employees are limited to Canada, not the US. Even so, this could easily bring some export demand to the US if it continues.

The US hog market has been under pressure in recent sessions. This is mainly from the huge pork supply the market currently has. US pork supplies are at record high levels and indications are they could rise even further. Supplies are high enough that in some cases producers are even being asked to hold hogs back from slaughter. This can have a negative impact on the supply line though, as hogs will be at even higher weights when they finally do make it to packing plants.

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.

Morning Comments; Tuesday, November 19th, 2019

Corn and soybeans have started to suffer from a lack of market interest. It really is not that heavy selling is taking place, it is just that the market cannot find much buying interest. Low volume is also impacting how far futures have been pushed in either direction. This is the result of sparse fresh news and how it is simply not generating any market interest. One of the main stories the market keeps rehashing is the US/Chinese trade war. We continue to hear a resolution is close at hand, and China is buying US commodities, but the market wants to see a full resolution. At this point, trade feels any resolution is better than where we are now. We are nearing the end of harvest which should start to ease some of the hedge pressure we have seen on the market, although sales have been lighter than usual this season. We are approaching the “sell or store” period on early harvested bushels which may change that. Export sales are perking up on soybeans, but corn remains depressed. This again is nothing new for the market. When there is a void of news such as this, we tend to see more emphasis on technicals, and these are not currently offering much support either. The markets are all approaching oversold, which is limiting fresh selling interest. This is especially the case in corn and wheat where funds are already holding short positions.

Highlights

* No official news on US/Chinese trade deal progress

* Trade doubts resolution this year

* Both sides claim talks are going well

* MFP payments next week

* US propane up 25% since September

* China cuts short-term funding rate

* Markets technically oversold

* Harvest is progressing

Corn

* Corn 76% harvested, normal is 92%

* Basis continues to firm

* Low prices starting to attract buyers

* So Korean bookings from US -96% year to year

* Japan corn bookings -56%, Mexico -17%

Soybeans

* 91% harvested, 95% is average

* Harvest pressure lifting

* US crush may be underestimated

* US crush margins improving

* SAM weather improves

Wheat

* Winter wheat 54% Good/Excellent

* Large global supply

* US demand slowing

* Funds hold short position

* Analysts lower EU crop

Livestock

* Chinese pork values up 157% year ago

* China to see pork production drop 15-20% in 2020

* China govt encourages expansion in pork production

* Large slaughter numbers

* Lack of trade resolution

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.

Closing Comments; Monday, November 18th, 2019

Corn and soybeans traded on the negative side for much of the day session today while wheat posted moderate gains. Technicals were the main reason for this, as buy-stops in wheat provided support while corn and soybeans suffered from light selling. Confusion over soybean sales being cancelled initially weighed on soybeans, but a more favorable weather forecast for South America was more of a negative factor. Corn struggled from ongoing demand worries, even with a 132,000 metric ton sale to an unknown buyer.

Secretary of Ag Sonny Purdue has announced that the next tranche of MFP payments is on its way. Purdue claims farmers should have these before the Thanksgiving holiday. This will be 25% of the total allotment, half of what the initial tranche payment was. Secretary Purdue was quick to claim that farmers should not count on a future payment if a trade deal with China is reached.

Not much in the way of progress was announced on US and Chinese trade issues today, even though both sides claim talks are going well. For the US the main hold up remains the unwillingness of China to commit to a volume of imports. At the same time the US is unwilling to roll back and existing tariffs, although it was announced today the US may be willing to compromise on the technology side with China. The next round of US tariffs on Chinese good are scheduled to take effect on December 15th.

Even without a trade agreement, China continues to book US commodities. Last week China booked 760,000 metric tons of US soybeans, which was 61% of all sales. For the calendar year China has booked 8 million metric tons of US soybeans as trade negotiations have taken place. This compares to last year’s 648,000 metric tons at the height of the trade war. Chinese bookings are still well below the 18.6 mmt that had been booked up to this point in 2017 which was prior to the trade war beginning.

US export inspections for the week ending November 14th favored soybeans over the grains. Soybean inspections totaled 56.3 million bu, well above the volume needed on a weekly basis. Corn inspections fell short of needs at 25 million bu, as did wheat with 16.5 million bu. Yearly corn export inspections now trail last year by 275 million bu, while soybeans are now 49.5 million bu ahead of a year ago and wheat inspections are up 77 million bu on the year.

Brazil is currently projected to export 70 million metric tons of soybeans this marketing year, but that figure may be too low. The USDA projected this export volume in its latest WASDE report, which is down 16.8% from last year. This reduction is the result of better trade relations between the US and China compared to last year. Recent loadings out of Brazil indicate this number may be too low and may need to be bumped up another 1 mmt. While this may be a minimal amount, it is still competition for the United States.

Soybean planting in Brazil is advancing but has again fallen below the five-year average. It is reported that 67% of Brazil’s soybeans are now planted, down 3% from average. This is from the widespread rains that fell across the country last week. While these have slowed planting, they have also led to some analysts raising crop expectations.

The financial firm Rabobank believes that Chinese pork production will continue to fall in 2020. Estimates show China’s hog herd is down nearly 40% for 2019 due to African Swine Fever, and even with improved safety measures, more loss is likely. The firm believes China pork production will slide another 10-15% in 2020. Analysts believe this will make China more reliant on the global market for meat imports, with emphasis on pork and poultry.

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.

Morning Comments; Monday, November 18th, 2019

The market has fallen back into its pattern of mixed trade direction between grains and soybeans. This is mostly from technical positioning, with little reason for a fundamental reaction such as this to take place. We did see all three main contracts approach very important lines of technical support last week. While these did hold, they will need to continue to do so to prevent a shift in total market attitude. This week will be the last full one of the month for trade as markets are closed next Thursday for Thanksgiving and then have a shortened day on Friday. As a result, we could easily see more positioning in the market this week, especially on the December contracts as they go into deliver at the end of the month. Trade will again be focusing on global weather this week, especially to see if forecasted rains take place in the dry regions of South America. Northern Brazil has had plenty of rain recently, but the southern part of the country is drying out. There are also dry pockets forming in Argentina once again. Of course we will also see how the remainder of harvest goes in the US this week as most areas should be able to wrap up soybeans and corn should be in its final stages. That said, some corn will likely be left in the field for several weeks as farmers try to let it dry down naturally. Any developments with US and China on trade will also impact this week’s price discovery as well.

Highlights

* Trade negotiation updates

* USMCA still expected this year

* Trade war impacting equipment manufacturers

* Next set of tariffs scheduled for Dec 15th

* China continues to buy US soybeans

* CME group to launch Brazil soybean contract

* Brazil corn sales remain strong

* 32 vessels in US soy line up for China

Corn

* Slow harvest pace

* Farmers waiting for crop to dry in fields

* Feed demand may rise

* Basis continues to firm

* Yearly exports -47% from last year

Soybeans

* Concerns over Canola quality

* Rains mixed for Brazil

* Yearly sales equal to last year

* Brazil soy 67% planted

* Oct crush a record 175.4 mbu

Wheat

* Minimal US winterkill

* Dollar weighs on US sales

* Yearly sales 4.7% ahead of last year

* US to expand exports to Brazil

* Ukraine grain exports +4.2 mmt on the year

Livestock

* Beef demand raising in China

* China bought 5,500 mt 2019 pork last week

* China books 9,900 mt 2020 US pork

* US exports 25,000 mt beef last week

* US hogs at lowest level of 2019

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.

Closing Comments; Friday, November 15th, 2019

Trade continued with its pattern for mixed activity today, with grains under pressure and soybeans higher. Export sales data added to this divergence as numbers favored soybeans over the grains. Reports that progress was in fact being made on US/Chinese trade relations supported soybeans as well. Once again low volume and a lack of fresh fundamental news weighed on all commodities, mainly the grains.

Export sales for the week ending November 7th were less than favorable for corn. For the week the US sold 22.9 million bu of corn, 10 mbu less than needed on a weekly basis. Yearly corn sales now total 491 mbu, a large 47% below the pace seen a year ago at this stage of the marketing year. Soybean sales were solid with 46 mbu, twice the needed amount per week. Cumulative soybean sales are now equal to those of last year. Weekly wheat sales were low at 8.77 mbu while 14 mbu is needed. Yearly wheat sales are still 4.7% higher than last year.

Concerns are mounting over the export demand pace on US corn. Current marketing year commitments of 491 mbu are the third lowest for any year in history at this stage. This includes the drought year of 2012/13 when drought devastated US production. The problem is that US corn is simply not competitive in the global market. Cost of production on US corn is higher than the rest of the world which means a higher price is attached to it. Weaker global currency values compared to the US dollar are also a factor in buyers passing over the US for corn needs.

One country that is not missing out on corn sales in Brazil. In the November WASDE report the USDA raised Brazilian corn exports to a record 41 million metric tons. Brazilian corn sales have not slowed since the report was released, and thoughts are it could be raised another 2 mmt in future reports. Last week’s Brazilian corn sales were twice of those out of the US, showing how much of the global market share the US is missing out on.

The NOPA soybean crush report for October was released today with record soybean usage. For the month, NOPA members crushed 175.4 mbu of soybeans, 2.4 mbu above trade expectations. The US export pace on soybeans has been sluggish this marketing year, which is keeping more US soybeans in the domestic market. This, along with elevated feed demand, are primary factors for the high crush numbers. NOPA data also showed a dip in oil reserves and a bump in meal exports.

According to data from the St Louis Federal Reserve, economic struggles for US farmers are expected to continue into 2020. This is from the quarterly survey of farmers in that district, which covers the heart of the US Corn Belt. Low commodity values are the primary reason for this projection. If correct, this will make the 6th straight year of declining income.

Farmers in Canada are likely going to be facing a tough ag economy as well. This is from loss of production on the country’s canola crop. An early start to winter in Canada brought heavy snow and rain to Canadian farms, impacting millions of acres of canola production. It is believed that Canada still has 2.7 million acres of canola to harvest, the most in the past three years. While some of these acres can be harvested at a later date, yield will be compromised. This will be a factor in revenue for many of Canada’s farmers next spring when planting decisions are made.

A story has been circulating through the market all week surrounding economic ties between China and Brazil. Today it was announced that China will be providing Brazil with $100 billion in funding, with a large portion of this to be spent on infrastructure. This will add to the $57 billion China has already spent over the past 10 years. These is little doubt this will solidify the ties between the two countries.

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.

Weekly Market Review; Friday, November 15th, 2019

Trade Negotiations Continue

Trade talks between the US and China have hit a snag that may jeopardize the entire negotiation process. The United States stated that existing tariffs would not be rolled back and has no plans to do so. The logic behind this is that the US would then have no bargaining power as negotiations move forward. While speaking at the Economic club of New York recently, President Trump stated that a deal with China was “close” and that China was “dying to make a deal.” The market wrote off this statement, and instead wants to see actual business being done. If no deal is reached, the next round of US tariffs on Chinese products are set to go into effect on December 15th.

There are also growing concerns over existing soybean sales the US has with China. There is a reported 66 to 88 million bu of US soybeans sitting in Chinese ports waiting to be unloaded. Some of these vessels have been staged since September, and the demurrage cost of this has been in the millions of dollars. Chinese officials claim port facilities are full and cannot unload the waiting vessels. It would not be surprising to see Chinese buyers wash out of bookings if this persists. We may also see a hesitation of buyers to book soybeans given the chance of not having them delivered in a timely manner.

Even as the US harvest progresses, country movement of corn and soybeans remains light. This is the primary result of lower yields and increased storage capacity. Farmers are also willing to wait for a market recovery before extending coverage. The recent Market Facilitation Payments have given many enough revenue for now that they can delay sales in hopes of higher values.

This low country movement has caused basis to firm in several areas of the Corn Belt. The most improvement has been in the East where harvest is slower. Reduced yield reports in this area are also causing buyers to push for what deliveries they can secure. Many buyers across the Corn Belt have resorted to alternative contracts to simple sales to secure bushels, including deferred pricing, reduced drying charges, and free storage.

Another country seeing limited movement right now is Russia on wheat. Even with wheat values trading at six-month highs, farmers in Russia have marketed few bushels. Farmers have adequate cash reserves from earlier sales and are waiting to see if the market appreciates even further before extending sales. Storage in Russia has expanded in recent years the same as it has in the US and other grain producing countries, which is also allowing for more holding of inventory. This may not make Russia a bigger competitor in the global market, but rather we could see a longer period of competition on a whole.

Russia is also harvesting their corn crop and yields are coming in much higher than expected. The average corn yield in Russia is now at 87.8 bushels per acre, a record for that country. The USDA is forecasting total corn production in Russia to be up 14.6% on the year but analysts in the country believe it will be even higher. With Russia’s corn harvest at 67% it is expected yields will be up 29% and total crop size will increase by 7%.

Ever since the start of the current marketing year we have been faced with poor corn export performance, but this may be coming to an end. The main reason for the slow demand for US corn has been competition from other sources, mainly Brazil, Argentina, and Ukraine. While Ukraine still has corn for export, Brazil is nearing the end of what is their typical export window. We are also seeing Argentina absent from the export offers from December forward.

Updated numbers on Chinese hog losses vary considerably from previous totals. According to the Chinese National Bureau of Statistics, Chinese hog losses in the first nine months of 2019 from African Swine Fever totaled 28.5% of production. This is a considerable difference from the country’s Ag Ministry claim that 41% of hogs have been lost. This lower number would answer the question as to why China has been importing less pork that expected.

The USDA has released its baseline estimates, which are their long-term supply and demand forecasts. These numbers are basically the precursor to the Ag Outlook Forum data that is released in February. For corn, the USDA believes carryout will jump to 2.15 billion bu in the next marketing year and reach 2.81 billion bu by the end of the 2024/25 year. Soybean carryout will build to 518 million bu next year and range from there to 616 million bu for the next four years. Wheat ending stocks are forecast to decrease to 950 million bu next year, then hold close to 900 million bu through the next four years.

A growing number of US farmers are going to 3rd party lenders for financing needs. This comes on a tightening of credit that most borrowers are seeing across the US. The concern with this is that some of these lenders do not follow the same regulations and guidelines that traditional lenders do, and farmers are facing very high interest rates. As a result, more US farmers are facing economic issues, including bankruptcy.

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.

Morning Comments; Friday, November 15th, 2019

Once again trade has turned into a sideways pattern with little fresh news to drive it in either direction. Not even the elevated business we have seen with China on soybeans has been able to generate buying interest this week. There is hope this could change today with the release of the monthly NOPA crush report for October. Estimates are for 166.8 million bu of soybean usage for the month which would be the second highest volume for the month. Trade will also receive the delayed export sales data today and focus on just how much business has been done with China. Trade also looking at other buyers closely as concerns build that China will back away from the US once the South American harvest gets underway. With very low forward purchases on the books this is a negative factor. The market will also hope for some sign of a resolution between the US and China on trade today but is not getting overly optimistic. Low volume and technical resistance have also capped this week’s activity. No matter what we see for a fundamental shift, these two factors will hang over the market until they reverse. Outside markets will also be influential today as economic data is becoming less promising, although recession talk has subsided for now.

Highlights

* Trade negotiation updates

* China to invest $100 billion in Brazil

* Chinese economy slowing

* US jobless claims at 4 month high

* China continues to buy US soybeans

* CME group to launch Brazil soybean contract

* NOPA crush and Export sales today

* Farm economy to remain depressed through 2020

Corn

* US farmers leave crop to dry

* Slow harvest prevents logistic issues

* Rains for Argentina

* Egypt to raise corn plantings

* US ethanol production highest since last August

Soybeans

* Waiting for trade clarification

* China remains active buyer without deal

* Soils starting to dry in So Brazil

* NOPA crush est at 166.8 bbu for Oct

* Harvest pressure lifting

Wheat

* Australian harvest starting

* US dollar limiting exports

* Wheat in a buyer’s market

* No winter crop loss reported

* Lower est on Argentine crop

Livestock

* Trade anxious for Chinese poultry business

* Poultry demand to generate $100 billion in revenue, est

* Economy weighs on US beef demand

* China looking for cheapest meat imports

* US slaughter down on the week

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.

Closing Comments; Thursday, November 14th, 2019

Soybeans and wheat were under pressure for much of today’s session while corn held to the upside. Corn futures took their support from a higher cash market and oversold indicators. Even with a flash sale on soybean of 129,000 metric tons to China the contract struggled today from a lack of fresh long-term news. A weaker global market pressured all US commodities as did concerns over the world economy. A lack of active selling kept losses in check.

The market has failed to react to the export news on soybean sales this week to China. Even with a large supply in port and ongoing trade friction, China continues to buy from the US, with over seven cargoes being sold this week already. This is because trade feels these sales are just to cover the gap between South American crops, and demand will drop once the South American harvest begins. To negate this, we will need to start seeing soybean sales for late spring and early summer months, when US sales tend to erode.

A news story that has generated as many questions as answers is the developments between Brazil and China. Yesterday it was announced that China and Brazil were working on developing plans for free trade. Brazil was quick to reject this claim, stating instead the country was looking at expanding trade with several countries. Either way this is concerning to the US market, as other countries are quickly trying to step in to provide China its needs while the trade dispute with the United States lingers on.

Conflicting reports are coming out on the size of Brazil’s corn and soybean crops. The firm CONAB pegged crops at 120.9 million metric tons and corn at 98.4 mmt in its latest projection. Private firms in Brazil are projecting larger crops though, with some up to 124 mmt of soybeans and 101 mmt of corn. The difference in how the data is collected is the main reason for the discrepancy in estimates.

Even with winter weather moving through the Corn Belt, few farmers are showing urgency in getting their corn out of the field. Many have elected to leave corn stand as long as they can in hopes remaining fields will continue to dry down naturally. This has caused a tightness in the cash market that is being reflected by current basis levels, especially in regions where production is down from last year. It is not uncommon to hear of significant basis pushes in these areas, with cash bids above futures in select regions.

As the corn harvest progresses, we are gathering more information on crop quality. This seems to be as variable as everything else that has been associated with the crop. Several reports are coming in from the northern regions of low test weights, with some struggling to reach fifty pounds per bushel. This has some elevators pushing for higher test weight corn for blending purposes. The unknown with this situation is what it may mean for end users and final products, as well as the impact it may have on export demand.

Ethanol manufacturing data for the week ending November 8th was supportive for the corn complex. Production for the week averaged 1.03 million barrels per day, a 13,000-barrel increase from the week before, and the highest level since last August. At the same time, ethanol stocks dropped a large 889,000 barrels. This puts US ethanol inventory at 20.89 million barrels, the lowest in two years.

The US poultry industry received friendly news today in that China would be lifting its ban on imports. China placed a ban on US poultry imports in 2015 following the outbreak of avian influenza. China now needs US poultry to combat the high prices of its domestic pork which have nearly doubled in the past year. Chinese consumers have also shifted to poultry over beef and pork as a staple in their diets.

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.

Morning Comments; Thursday, November 14th, 2019

Corn and soybeans tried to find a solid footing yesterday following recent losses. For soybeans, strength came from news that China is still showing interest in our offerings as they are the lowest in the current global market. Even with ongoing trade issues, China has booked a reported 7 vessels of US soybeans this week. Soybeans are also taking light support from thoughts recent selling has been overdone, especially with a fair amount of the US crop still subject to winter weather conditions. Soybeans continue to struggle with South American production estimates though, and how these will likely nullify any US losses in the global market. Corn has found solid support at the long-term uptrend line drawn off the lows of September 9th and 12th. This puts major support right at $3.72, which has been our recent low. An overall lack of fresh fundamental news is plaguing the entire market. Today we will get the weekly ethanol production figures and trade is expecting to see another slight increase in output as margins have improved in recent weeks. Aside from that, trade developments and market reaction to impeachment talks will be key factors in today’s market action.

Highlights

* Markets follow path of least resistance

* Fall tillage limited this year

* ADM; Ethanol business is terrible

* No fresh news on Chinese trade

* China still buying US soybeans

* President Trump says trade deal will be on US terms

* Privates predict larger Brazil crops

* US rail traffic continues to slow

Corn

* Brazil corn production questioned

* US has 27.8 million acres to harvest

* Basis continues to firm in ECB

* Low test weights reported

* Tech support forms at $3.72

Soybeans

* Record Brazil soy production expected

* Private analysts peg Brazil soy at 124 mmt

* China continues to buy US soybeans

* Slow Canadian canola sales

* US has 11.34 million acres to harvest

Wheat

* Cold temps not causing winter loss

* World stocks remains large

* Market is oversold

* Global values under pressure

* USDA may lower ending stocks in next WASDE

Livestock

* Boxed beef highest since 2017

* Cash cattle lead futures

* Domestic pork in China up 188% on the year

* Economic news weighs on livestock

* China lifts ban on US poultry imports

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.

Closing Comments; Wednesday, November 13th, 2019

Trade was on the negative side for much of today’s session, but losses in corn and soybeans were minimal. Wheat took the biggest hit early in the session as the contract simply could not find any buying interest. Wheat also suffered from high crop ratings and the lack of a bullish story. Corn and soybeans were more stable, with slow harvest supporting corn and a 106,000 metric ton sale to an unknown supporting soybeans.

The Brazilian firm CONAB was out this morning with revised production figure on the 2019/20 corn and soybean crops. CONAB raised the soybean crop estimate to a record 120.9 million metric tons compared to last year’s 115 mmt. This is mainly from an increase to soy plantings of 2.3%. CONAB is projecting Brazilian corn production at 98.37 mmt, down from last year’s 100.5 mmt due to the slow start to soy planting and dry pockets of soil. The firm is projecting steady yearly exports of 72 mmt for soybeans and 34 mmt on corn.

According to last night’s figures, the United States still has 27.8 million corn and 11.34 million soybean acres to harvest. There are some concerns over this following the heavy snow that fell across the Upper Corn Belt this week. Even if minimal, at least some yield loss has taken place with this event. Normally this would give the market more support than it has, as slower demand has negated the crop loss possibility.

The real issue with these standing crops is what is happening to quality. While crops will likely stand through the snow, conditions are preventing drying in most areas. At the same time, propane restrictions are preventing commercial drying in parts of the Midwest. This has caused some farmers to harvest the crops wet and place in storage to dry later. While this can be done, the risk of damage can be high, especially if temperatures warm and humidity climbs.

Given current weather outlooks, some of these regions will see present conditions linger for at least the next week. While parts of the Corn Belt will be dry for the next week, some will see chances of precipitation, mainly in the upper regions. Not only can this be a factor for getting crops out, but for fall tillage as well. Reports are already coming in of farmers not being able to apply fall fertilizer as hoped, which can be a factor for acres next spring.

There is one factor in the current market that seems to be over-looked by most, that being world corn reserves. In the latest balance sheets report world corn stocks were reduced from 302.6 mmt to 296 mmt. While this is still an adequate volume of corn, there is a well-defined trend that is taking place. Ever since a high of 350 mmt in 2016, the world corn supply has been in a period of contraction. This is not necessarily from low production, but from elevated demand. Corn reserves are still well above previous years, but the decrease still needs to be monitored.

Not only have fundamentals failed to give the current market structure much support, neither have the technicals. In the past week, several points of technical support have broken on corn, soybeans, and wheat. While this has put the contracts into short-term down trends, long-term patterns are still positive. The issue is that right now the path of least resistance is down and will likely remain until we uncover fresh buying interest.

Even though China and the US are still at odds on trade, and China is having issues unloading vessels currently in port, the country continues to book US soybeans. It is being reported that China has already booked 7 US vessels of soybeans this week. The primary reason for this is price, as US soybeans are currently the cheapest offered in the global market. Chinese crush margins have also improved in recent weeks. This has negated some of the concern over the lack of a trade war resolution.

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.

Morning Comments; Thursday, October 31st, 2019

Futures slipped lower overnight on negative trade news, as Chinese officials have stated they doubt a long-term trade deal will be possible under current conditions. The continued lack of fresh market news is also pressuring futures this morning. While fresh market news remains limited, we may still see an increase in trade volume today. This is from the fact its First Notice Day for the November contracts. This tends to generate more market positioning for contracts that go into delivery, which would focus on the November soybean contract today. Trade will also receive the weekly export numbers and will immediately look to see if China bought any soybeans last week. Trade is expecting a wide range of soybean sales possibilities today, from 18 million bu on the low end to just over 37 million bu on the high side. What may be more of a factor is if any more cancellations take place such as they did last week. Corn and wheat sales are expected to be on the light side. There is little doubt we will continue to hear updates on US/Chinese trade relations today, especially following the announcement the Chile trade summit had been cancelled. Both sides claim talks are ongoing and progress is still being made, but trade is no longer interested in proposals, and wants to see actual sales rather than projections.

Highlights

* FND on November contracts

* US/Chinese trade deal questioned

* Chile summit canceled due to civil unrest

* Brazil gets rains, Argentina still dry

* Fed cuts interest rate ¼ point

* US dollar sharply lower

* Trade waiting for tax changes in Argentina

* Month End positioning

Corn

* Slow movement supports basis

* Snow to delay harvest

* Buyers sourcing needs from SAM, Ukraine

* Ethanol production up, stocks down

* Record Russian yields; above USDA

Soybeans

* Hopes fade on Chinese trade deal

* Gulf basis firms

* Planting pace speeds up in Brazil

* Yearly demand questioned

* Heavier movement than on corn

Wheat

* US basis firms

* Mills pushing for inventory

* Egypt bypasses US for needs

* Moisture a benefit for Winter crop

* World wheat market remains firm

Livestock

* Wholesale beef values up

* Cattle slaughter slows

* Hog cut-out values rebound

* Concern over Chinese/Brazil trade strength

* Cheap feed grains benefit margins

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.

Morning Comments; Wednesday, October 30th, 2019

The see-saw pattern of mixed trade continued overnight with grains under pressure and soybeans showing strength. Trade continues to search for a catalyst to make a move and is struggling to find one. One of the main stories in the market for the past several weeks has been the progress made on US and Chinese trade relations since the previous meeting in early October. Since then both sides have said progress was being made and an agreement was close to being finalized. Trade has been hesitant to figure this into futures though, as actual export dealings want to be seen. Yesterday morning it was thought this was close to happening, but this opinion changed late in the day when a source from the White House stated President Trump may not agree to the terms being presented. This makes trade reaction to any additional news less likely. Trade is also monitoring weather as heavy snow and rain is forecast for parts of the Corn Belt for the next few days, followed by colder temperatures. Given the recent lack of fresh news, these topics continue to receive daily attention. The next round of fresh news may not come until the November 8th WASDE report. Positioning ahead of this may generate elevated market volatility.

Highlights

* November FND tomorrow

* US may not sign Chinese trade deal next month

* Fed meeting on interest rates

* Use of delayed price contracts on the rise

* Attitude is to wait for Nov S/D report for direction

* Daily soybean limit from 65 to 60 cents on Friday

* Impeachment vote on Thursday

* Snow predicted for Eastern Corn Belt

Corn

* Demand remains a concern

* Slow harvest limits market pressure

* Farmers still hoping crops dry down

* Gulf basis firm

* EU raises corn import forecast to 6.5 mmt

Soybeans

* Harvest pressure building

* Gulf basis steady; PNW firming

* Wetter pattern for SAM

* EU raises soy import forecast 2%

* EU increases soy meal imports by 20%

Wheat

* Global supply is huge

* Slightly lower US winter wheat rating

* Global market remains strong

* Rapid planting of winter crop

* EU raises imports 50%

Livestock

* Near record hog slaughter numbers

* Hog cut-out values lower

* Livestock correcting from recent rally

* Chinese trade uncertainty

* Chinese pork supply to decline 60% in 4th quarter

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.

Morning Comments; Tuesday, October 29th, 2019

Market weakness continued in the overnight session as trade struggles to find fresh news. We continue to see trade gravitate to three main topics; weather, exports, and trade relations. These have been the main topics in the market for the past several weeks and likely will be until the next supply and demand report is released on November 8th. Temperatures are expected to drop to much lower levels as we progress through this week. What trade is keeping an eye on the most is the rain/snow event that is forecast for the Corn Belt. These conditions are expected to form in the Western Corn Belt and move east. The most snow is forecast for the Iowa/Illinois border, with totals reaching 6 inches in some locations. Export interest remains low on corn as the US is still the highest priced source in the global market. This may change as we move forward though, and others start to deplete their reserves. The question is how long this may take given larger global production reports. The window for US corn sales is shrinking and the program needs to start soon to avoid changes to carryout numbers.

Highlights

* Harvest progress as expected

* Argentine election may impact all markets

* Interior basis values mixed

* FND on November contracts is Thursday

* Chinese industrial profits -5.3% in September

* Phase 1 of US/China trade deal mostly complete

* Trade doubts January MFP payment

* Snow predicted for Eastern Corn Belt

Corn

* US corn 93% mature, normal is 99%

* US harvest 41% complete, 61% is average

* Funds comfortable with short position

* Export loadings only 40% of year ago

* Weekly inspections poor at 15 mbu

Soybeans

* Harvest at 62%, 78% is average

* Chinese demand still slow

* Wetter pattern for SAM

* Weekly inspections high at 57.6 mbu

* Funds holding long position

Wheat

* Winter wheat 56% G/E

* Buyers pass on US wheat

* Good export inspections at 19.2 mbu

* Winter wheat crop smallest in 110 years

* Wheat inventory adequate

Livestock

* Funds hold long position on hogs for 31 weeks

* High slaughter continues

* Cash cattle push futures

* Lower on feed numbers support cattle

* China holding hogs for breeding rather than slaughter

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.

Morning Comments; Monday, October 28th, 2019

Trade was mixed to start the week with grains under pressure and soybeans on the plus side. Much of what we are seeing is follow through action from last week as little has changed in the market. Last week was one of the most lethargic we have seen in some time. All week the market recirculated the same news and tried to build a futures move off it. This weighed on futures, with corn down 5 ¾ cent, soybeans down 1 ¼ cent, and wheat off 10 ¾ cents in Chicago. Much of the loss in futures was from a lack of buying rather than selling, except for the Friday action on soybeans. Active selling in the November soybean contract dropped futures right to technical support at $9.20, which was again overnight support. If this level breaks, it will reverse the overall trend of the contract to a bearish outlook from the current uptrend. Many of the factors that influenced trade fundamentally last week will again be factors this week, including Chinese trade developments, weather, and harvest reports. We will also see end of the month positioning take place early this week, especially on the November soybean contract as it goes into delivery.

Highlights

* US loses soy business to So America

* Ukraine grain exports +29% this marketing year

* US pushes for USMCA resolution

* Trade concerned with export cancellations

* Argentine election may impact acreage

* Country movement starting to rise

* Soy vessel line up for China highest in 2 years

Corn

* So Africa crop up 10%

* US corn not competitive in world market

* Corn sales 417 mbu behind last year

* Larger US carryout expected

* Higher than expected yields being reported

Soybeans

* Export basis firming

* China buys 1.73 mmt US soybeans in Sep

* China buys 4.79 mmt Brazil soy in Sep

* China to increase soy plantings 8%

* US sales 92 mbu behind last year

Wheat

* Global buyers focus on Russian supplies

* Yearly sales +59 mbu from last year

* Canadian harvest picks up momentum

* Drought losses in Argentina build

* US sales pace 54% of total estimates

Livestock

* Cattle on feed as expected

* Pork prices in China +9.2% last week

* Cash cattle push futures

* US pork exports 36% ahead of last year

* China to allow more Brazilian pork imports

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.

Weekly Market Review;Friday, October 25th, 2019

Harvest Begins

We are starting to see more harvest activity in the United States as weather permits. As always, the initial interest is on yield when this happens. To nobody’s surprise, early yields in the US are variable. While no specific numbers have been given, reports ranger from “better than expected but below a year ago” to “best yields ever.” These reports indicate it may be well after harvest before accurate production data can be formed.

While harvest is starting in the US, planting is progressing in South America. The most interest right now is on Brazil where soybean planting has reached 21%. Analysts are pointing out how this is below last year’s pace of 34% complete at this date, but it is right at the five-year average. Given forecasts for rains to continue across Brazil this number will continue to increase.

The question when it comes to Brazil’s planting is what the slower pace than a year ago may have on the Safrinha crop. This is Brazil’s second corn crop and is where the record production the country had a year ago came from. One of the main reasons for last year’s record Safrinha crop was that it fully matured before the end of the rainy season, which usually stops in May. If corn planting is slower this year the crop could run out of moisture before harvested, reducing final yields.

Trade continues monitor trade relations between the US and China for clarification on progress. It now appears as though the trade war has not ended, but rather both sides have agreed to not escalation tensions any further. The big hold up remains tariffs, and how China is demanding these be removed before agreeing to any proposal. Even with these tariffs in place we are seeing trade talk between the two parties, which is a positive sign.

There is still concern over the lack of Chinese business since the announcement that a tentative trade deal with the US had been reached. China had instead been doing business with Brazil, booking a reported 8 vessels of soybeans in the past week. This is thought to total 480,000 metric tons of soybeans. While it is unusual for China to source soybeans from Brazil at this time of the year, the currency spread between Brazil and the US favors them as a soybean source.

When it comes to Chinese soybean demand, imports on a whole are down. In the month of September, China imported 13.5% fewer soybeans than in September of 2018. This is a direct result of ongoing African Swine Fever losses in hog production. China is still buying soybeans for reserve though, which is generating demand.

Economic data shows the trade war between the US and China is taking a toll on China. According to research from MidCo Commodities, consumer price inflation in China is up 3% from a year ago and has reached a 6-year high. This is a direct result of elevated food prices which have risen 11.2% in the past year. The majority of this is stemming from a 69% rise in pork values, the fastest rise in the past 12 years.

Updated numbers on Chinese hog losses vary considerably from previous totals. According to the Chinese National Bureau of Statistics, Chinese hog losses in the first nine months of 2019 from African Swine Fever totaled 28.5% of production. This is a considerable difference from the country’s Ag Ministry claim that 41% of hogs have been lost. This lower number would answer the question as to why China has been importing less pork that expected.

We are also hearing more opinions on when China may start to rebuild its hog herd. According to sources in the country, China will start to see a rebound in hog production in early 2020. This seems optimistic as African Swine Fever is still spreading through parts of the country. China is importing hogs to try and build though herd though, which may help with the quicker rebound in production.

Reports of a potential tax change in Argentina could greatly impact their soybean and soymeal exports. Argentina has reduced their export taxes on these products in an effort to gain more of a world market share. By doing so, tax revenue has dropped considerably in Argentina, and the country is starting to feel a fiscal strain. Now the country may raise these taxes which would elevate product values to a point where the US would become much more competitive in the global market.

We are already starting to see private estimates released for the 2020 US production year’s acreage. It is believed that the US will plant 95.3 million corn acres this coming year, a 5.9% increase from last year. Soybean acres are forecast to rise 12% to an 85.3 million total. If all other factors hold steady, including yield, this would leave the US with plentiful ending stocks next year. For corn, the carryout could quickly become burdensome if we do not see a build in demand.

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.

Morning Comments; Friday, October 25th, 2019

Trade was narrowly mixed overnight as fresh news remains sparse. All week the market has struggled with this lack of fresh supportive news and today may be little different. While there have been several stories released for the market, much of the news was already factored into values. This was especially the case on Chinese trade developments. Weather has been a factor this week, but outlooks are conflicting in their models. All forecasts are calling for cooler temperatures across the Corn Belt for next week but are split in their precipitation outlooks. Some models show heavy rain and snow to delay harvest while others have minimal precipitation. Which one of these verifies could have a significant impact on next week’s trade. We have not seen much on the way of harvest pressure yet this fall which is preventing futures from falling. At the same time, the lack of fresh news and lackluster demand is keeping gains at a minimum. Tight technical ranges are adding to the sideways trade we have seen.

Highlights

* China trade proposal

* IGC lowers world grain production

* Cooler US weather forecast

* November options expire today

* Trade looking forward to Nov 8th WASDE report

* Saudi Arabia shows interest in buying Russian farm land

* US economic concerns impact investing

Corn

* Weekly sales improve, still below needs

* Year to date sales lowest in 30 years

* Crop slow to dry in field

* Ukraine on pace for 2 mmt Oct corn exports

* Ukraine exported 189,000 mt corn in Sep

Soybeans

* Sales drop from recent pace

* Chinese buyers resurface

* Argentine election this weekend to determine plantings

* Sep crush in China -5.6% from year ago

* Brazil soy planting holds at average pace

Wheat

* IGC lowers world wheat production

* Global wheat usage reduced equal to production

* Russia lowers forecast exports by 10%

* Drought continues to impact global production

* Feed wheat demand rising

Livestock

* Cattle on feed estimated at 98.8%

* Total COF est at 11.27 million head

* Placements/marketings both near 100%

* US beef exports last week 18,774 mt

* US pork exports 31,957 mt; 9,176 mt to China

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.

Morning Comments; Thursday, October 24th, 2019

Trade is mixed through the later overnight session with corn and soybeans on the plus side while wheat is fractionally lower. The commodity market has struggled this week with a lack of fresh fundamental news. We continue to hear trade proposals coming from China, but are failing to see actual business being done, which is limiting market reaction. Trade is now at the point where it wants physical evidence of export sales rather than estimates. Weather is also contributing to the sideways trade, as some regions of the Corn Belt can advance their fieldwork while others are idled. Trade sees this as progress, even if it is just regional. South American weather is also unchanged as rains continue to fall and soybean planting advances. Planting is behind last year’s pace, but is right at the five-year average, making it less of an issue. Technicals are offering market support but are also limiting advances. The problem with a market such as this is that traders lose interest and tend to look for other opportunities to invest in. The next release of market moving information may not be until the November 8th supply and demand report. Until then, it would not be surprising to see the sideways trade continue.

Highlights

* Chinese trade news

* US dollar volatility growing

* Favorable So American weather

* Snow possible in Corn Belt next week

* Hearing on Oct 29th to examine RFS policy

* Ethanol margins improve, plants push production

* US rail traffic -8.2% last week

Corn

* Slow harvest supports basis

* Farmers waiting for crop to dry in field

* Chinese yearly corn imports +33% last year

* US corn exports -62% on the year

* US ethanol stocks -10.6% from last year

Soybeans

* Technical double top generates selling

* Farmer sales on the rise

* Global oilseed higher

* 83% of Brazil soy area drier than normal

* US offerings under those of SAM

Wheat

* Acreage mixed from ECB to WCB

* Global demand remains high

* Australian crop est at 15.6 mmt; USDA at 18 mmt

* Traders doubt acreage reduction estimate

* Ukraine raises crop estimate as harvest progresses

Livestock

* China imports 161,836 mt pork in Sep

* Chinese Sep pork imports +71.6% on the year

* US beef stocks -8.5% year ago

* US pork stocks +1.6% on the year

* Cattle on feed Friday afternoon

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.

Morning Comments; Wednesday, October 23rd, 2019

Yesterday’s weak close carried over into the overnight session where futures posted slight declines. The pressure we are seeing in the market is not so much from selling, but rather a lack of buying interest. We are also seeing a correction in the charts from recent gains as contracts became over-extended on the nearby months. That said, we are seeing support hold, which is keeping commodities in tight, sideways patterns. Trade is also skeptic of the latest Chinese soybean news where China reported they would be willing to purchase up to 10 million metric tons of US soybeans. No timeline was given for this purchase, and in fact no defined quantity, which has raised some doubt over true intentions. Weather continues to give trade mixed signals and likely will again today. Some regions of the Corn Belt will be idled again today due to recent rainfall. Others believe they will be back at harvest today. While the pace of the US harvest will remain slow, the fact it is not at a complete standstill is limiting trade interest in delays.

Highlights

* Cold, wet US forecast

* Drier conditions to start November

* Rains forecast for South America

* No confirmation on Chinese trade

* US economic concerns linger

* Canadian election favors passage of USMCA

* Technical support holds

Corn

* Brazil export loadings 3x US pace

* Basis becoming mixed

* Trade groups displeased with EPA biofuel proposal

* Corn not drying in fields

* SAM firms lower corn production forecast

Soybeans

* Trade waiting for Chinese details

* Chinese crush margins strong

* SAM corn loadings benefit US soybean demand

* Reports of lost production from rains

* US offerings under those of SAM

Wheat

* Weak dollar provides support

* Ukraine may cut back on plantings

* ECB winter wheat acres up

* Canadian wheat stocks down

* US struggles to remain competitive in world market

Livestock

* China lifts 20-year ban on British beef

* China/Britain sign 5-year beef trade deal

* China working on ASF vaccine, claim to be close

* High slaughter numbers

* Slow cash trade

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.

Morning Comments; Tuesday, October 22nd, 2019

Buyers surfaced in overnight trade which has allowed futures to rebound. The ongoing sluggish harvest pace and less than perfect weather outlooks generated this buying interest. Traders showed little interest in commodities yesterday which was a direct result of sparse fresh news. There simply was not enough fresh news to warrant the establishing of new positions. This is more of a factor for the long side as funds have been actively covering short positions for the past several weeks. Now we are at a stage where the market will need fresh news to continue buying. Weather will remain a factor in today’s session as forecasts are calling for additional rainfall for the next week. This will delay harvest in several regions of the Corn Belt, some of which have struggled to get any harvest accomplished at all. This is starting to generate more concerns over crop quality and potential yield loss. The United States continues to see pressure in the global market on the export front as buyers opt for offerings from those commodity suppliers than the US, even though the US is underpriced on soybeans. The difference is tariffs and how they push the US back above the global market. Barring anything unforeseen, the market will continue to sort through these topics again today.

Highlights

* Ukraine grain exports +39% on the year

* Russian grain crop +8 mmt from year ago

* Larger 2020 acres for corn. soybeans

* No clarification on Chinese trade

* Soy planting in Brazil equal to 5-year average

* Rains seen as beneficial for SE US

* Displeasure given on EPA biofuel package

Corn

* Crop is 86% mature, normal is 97%

* Harvest at 30%, normal is 47%

* 2020 plantings est at 95.3 mil acres

* Buyers continue to pass on US corn

* US over priced in global market

Soybeans

* Harvest is 46%, normal is 64%

* US soybeans equal to Brazil, without tariffs

* 2020 plantings est at 85.3 mil acres

* Brazil weather to push back harvest

* China accounts for 40% of US sales

Wheat

* Spring wheat 96% harvested

* Winter wheat 77% planted; average is 75%

* Ukraine wheat yields +11.3% this year

* Canadian stocks lowered 100,000 mt

* US 202 acre est lowered 900,000

Livestock

* Cattle see profit taking develop

* Global pork demand rising

* Very high US poultry supply

* YTD cattle slaughter up 280,000

* YTD hog slaughter up 3 million

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.

Morning Comments; Monday, October 21st, 2019

Trade was firm overnight with soybeans leading the way. Many of the market factors that were worked with last week will again be factors in this week’s trade as well. One of the main ones will be trade news updates between the US and China. China has not purchased any soybeans of volume from the US since the latest talks concluded. Instead, China has booked large volumes of soybeans from Brazil as currency valuations favor them as a source. Weather will also be a factor, particularly how it may impact harvest in the US. Parts of the Corn Belt are forecast to receive upwards of 3 inches of rain in the next few days causing further delays. Others will miss the rain and make sizable advances. With this will come harvest reports and yield data to allow more accurate production estimates. Weather will also be a factor for planting in South America as activity appears to be picking up there as well. Outside markets, mainly the financials, and geopolitical developments will be factors in this week’s markets as well.

Highlights

* China buying land in Brazil

* US dollar at multi-week lows

* Chinese growth rate lowest in 27 years

* China passes on US soybeans, buys from Brazil

* No Chinese sales since latest talks

* Drought still impacting SAM crops

* Tariffs on EU products now in effect

Corn

* Heavy Argentine sales

* Argentine farmers selling ahead of tax changes

* Weekly sales 422 mbu behind year ago

* Balance sheets adjustments likely

* Basis values softer as harvest advances

Soybeans

* Weekly sales 105 mbu behind Last year

* No Chinese business

* Currency valuations favor Brazil for imports

* Rains to slow harvest

* Planting progresses in SAM

Wheat

* Cumulative sales 47 mbu ahead of last year

* Drought cuts Australian crop 5 mmt

* Rains delay winter wheat seeding in US

* Argentina lowers crop by 1.2 mmt

* Egypt has wheat needs covered through Feb

Livestock

* Chinese hog losses questioned

* Bureau of Statistics claims hog losses at 28%

* Chinese Ag Minister puts hog losses at 41%

* Last week’s pork export sales questioned

* US beef exports -7.7% last week

Closing Comments; Friday, October 18th, 2019

Soybeans and wheat were the leaders of today’s session soybeans took much of their support from solid weekly export sales. Thoughts we may see some damage to the US soybean crop if harvest continues to be strung out were also support for the soy complex. Wheat was also on the positive side as demand for that grain continues to hold steady while at the same time, we are seeing production losses in Australia and Argentina. Both harvest and planting are being delayed in the US due to ongoing rains, which supported soybeans and wheat as well. Corn trailed the other commodities today as poor demand continues to be a dark cloud over the grain.

Export sales for the week ending October 10th were mixed. Corn sales were again disappointing at just 14.5 million bu. This was under trade estimates and less than half of the volume needed on a weekly basis to meet USDA yearly projections. Soybean sales were at the top of the estimate range with 58.8 million bu which was also over twice the volume needed per week. Wheat sales also topped the amount needed with 14.5 million bu which was in the middle of expectations. For the year, corn sales now trail last year by 422 million bu and soybeans are down 105 million bu, but wheat sales are up 47 million bu.

The weekly sales number that received the most attention today was on pork. Sales data showed the US sold a huge 292,200 metric tons of pork last week, with 132,400 metric tons to Mexico and 94,000 metric tons to China. These totals were immediately questioned, and the USDA clarified their numbers. According to the USDA, these totals included sales from several weeks, and were not all done in the past week.

Trade is not just concerned over corn sales, but actual loadings as well. To date corn loadings for the marketing year only total 98.27 million bu, 272.5 million bu under the year ago total. Soybean loadings are ahead of last year’s pace by 13 million bu with a 189.6 million bu total. Wheat inspections currently total 347 million bu, a 60 million bu increase from last year.

In other export news, concern was voiced over the lack of Chinese business since last week’s announcement that a tentative trade deal with the US had been reached. Traders announced that China had instead been doing business with Brazil, booking a reported 8 vessels of soybeans since Monday. This is thought to total 480,000 metric tons of soybeans. While it is unusual for China to source soybeans from Brazil at this time of the year, the currency spread between Brazil and the US favors them as a soybean source.

Field scouts are evaluating the loss of production from last weekend’s snow storm that moved through North Dakota and Minnesota. There are initial reports that put crop loss in this area at 50 million bu on soybeans and from 100 to 200 million bu on corn. These are rough guesses though, and hard to justify at this time. Trade will wait for the data that is collected for the November 8th supply and demand report before adjusting their market position.

Updated numbers on Chinese hog losses were released today and varied considerably from previous totals. According to the Chinese National Bureau of Statistics, Chinese hog losses in the first nine months of 2019 from African Swine Fever totaled 28.5% of production. This is a considerable difference from the country’s Ag Ministry claim that 41% of hogs have been lost. This lower number would answer the question as to why China has been importing less pork that expected.

We are also hearing more opinions on when China may start to rebuild its hog herd. According to sources in the country, China will start to see a rebound in hog production in early 2020. This seems optimistic as African Swine Fever is still spreading through parts of the country. China is importing hogs to try and build though herd though, which may help with the quicker rebound in production.

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.

Closing Comments; Thursday, October 17th, 2019

Trade was on the positive side today with wheat taking the lead. This was an ongoing result of a weaker US dollar and losses to the spring crop. Hopes that the trade deal between the US and China is moving in a favorable manner provided additional support. Support faded as the day progressed as buyer interest waned with fresh news becoming sparse.

Wheat remains the leader of the market and has supported corn and soybeans. Abandonment of the remaining spring acres to be harvested is a primary reason for this, but so is the delays to winter wheat seeding. This is more of a case for western states and plains where rains continue to fall. The slow harvest to soybeans may also limit winter wheat planting in certain areas.

Several new updates on the US/Chinese trade negotiations were released today, but no official resolution has been made. The Chinese have stated they would like to increase purchases of US products but want their demands on tariffs and intellectual property met first. China has also stated that they will buy commodities “based on domestic demand and market principles.” This is a broad statement, leaving the door open for any volume of purchases they want. Later in the day both sides released statement that they desire a resolution to the dispute soon.

Ethanol manufacturing for the week ending October 11th grew from the week before. An average of 971,000 barrels of ethanol were manufactured each day, an 8,000-barrel increase from the week before. Ethanol stocks increased on the week following the sharp drop of a week ago. US ethanol stocks now stand at 22.06 million barrels, 837,000 more than the previous week. This volume of ethanol is 2.07 million fewer than a year ago.

The USDA has announced that they will be re-surveying some acres for the November supply and demand report. This will take place in North Dakota and Minnesota following last week’s winter storm in this region and focus on corn and soybeans. The USDA has indicated that any changes may be incorporated into the November balance sheets.

Weather continues to give today’s market underlying support. The next two weeks are expected to be cool with below normal temperatures for much of the Corn Belt. These include freezes for many parts of the Corn Belt, some of which still have maturing crops in the fields. Forecasts also include elevated precipitation chances for parts of the US, mainly around the Great Lakes and Eastern Corn Belt.

The US beef market continues to show strength. Live cattle futures have been on the rise since September 10th, appreciating 14% since then. This has caused an elevation in product values too, mainly ground beef, which is up 10% from a year ago. This rally has been brought by elevated demand with buyers such as South Korea taking 8% more US beef than during the previous year.

Economists from China believe pork values in that country will continue to increase. Pork values in China are already up 84% from a year ago as African Swine Fever continues to cut hog numbers. The concern with this is that it has driven inflation to a six-year high. China wants to ensure there is enough pork for the Lunar New Year in January though, and may step up imports ahead of this event. China also believes its hog herd numbers are bottoming out and numbers will start to rise in early 2020.

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.

Closing Comments; Wednesday, October 16th, 2019

Trade was mixed for much of today’s session with corn and soybeans slightly lower while wheat posted moderate advances. The dark cloud over the market remains the lack of a confirmed resolution between the United States and China on trade. Until a deal is confirmed, trade is going to be skeptical of rumored business potential. A sizable increase in harvest and the likelihood of another jump next week also kept corn and soybeans under pressure. Today’s losses were held in check by wetter long-range weather outlooks and a weaker US dollar.

Opinions were voiced today over the EPA biofuel package announcement that was made late yesterday. This proposal was met with heavy opposition from farm and renewable energy groups as it falls well short of expectations. The main objection is that it does not raise the volume of fuel to be blended and leaves the door open for a possible decrease. It also did little to close waiver loopholes, which is a major concern and issue.

Harvest continues to creep forward in the United States. Yesterday’s progress report showed 22% of the corn and 26% of the nation’s soybean crops have been harvested. These are both behind the five-year averages, but a jump is expected to be seen next week. The simple fact that harvest is advancing is what trade is focusing on. How much harvest gets done following next week is questionable, as even though a long way out, models do indicate a wetter pattern for much of the Corn Belt.

The export market has been relatively quiet this week. Yesterday we did see a soybean sale to an unknown and today Mexico was listed as a buyer of 137,160 metric tons of corn. The most attention on exports centers on China, as no large purchases have been made since a partial trade deal was announced. Even with these other sales, trade is focused on China right now, and wanting to see business with them.

Little fresh news is available on the US/China trade deal today. Both sides continue to talk, but there are some major points that need to be resolved prior to a full resolution taking place. One is the conflict over technology and intellectual properties, and the other one being existing tariffs. China has stated firmly that they want all tariffs removed before signing a trade agreement, and the US has stood by its stance that this will not happen. The next round of face to face talks are expected to take place in mid-November.

Even though US wheat is the highest priced in the global market, that grains showed the most strength today. Wheat took its support from the likelihood of abandonment of remaining spring crop acres due to poor quality. The global market has also appreciated in recent sessions which allows more room for the US market to work higher and remain competitive. The spread between wheat and corn has widened though, which will make some uses of wheat uneconomical, mainly feeding.

Another benefit for wheat is the weakening of the US dollar. A weaker US dollar makes commodities more affordable for an import buyer. In some cases, this can have more of an impact on commodity interest than price alone. Wheat is especially sensitive to the dollar value as that crop is more of a global one than corn or soybeans.

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.

Closing Comments; Tuesday, October 15th, 2019

Trade was mixed early today with soybeans on both sides of unchanged and the grains lower. A simple lack of buying interest weighed on the grains, as did building harvest pressure and limited demand. Soybeans took support from a sale of 142,579 million metric tons to an unknown buyer, but even this was limited. Ongoing uncertainty over US/China trade relations weighed on all commodities as did elevated harvest pressure. Broad-based support came from a hesitation to build short positions at current futures levels.

We are starting to see more harvest activity in the United States as weather permits. As always, the initial interest is on yield when this happens. To nobody’s surprise, early yields in the US are variable. While no specific numbers have been given, reports range from “better than expected but below a year ago” to “best yields ever.” These reports indicate it may be well after harvest before accurate production data can be formed.

While harvest is starting in the US, planting is progressing in South America. The most interest right now is on Brazil where soybean planting has reached 11%. Analysts are pointing out how this is below last year’s pace of 20% complete at this date, but it is right at the five-year average. Given forecasts for rains to continue across Brazil this number will continue to increase.

The question when it comes to Brazil’s planting is what the slower pace than a year ago may have on the Safrinha crop. This is Brazil’s second corn crop and is where the record production the country had a year ago came from. One of the main reasons for last year’s record Safrinha crop was that it fully matured before the end of the rainy season, which usually stops in May. If corn planting is slower this year the crop could run out of moisture before harvested, reducing final yields.

Trade continues to monitor trade relations between the US and China for clarification on progress. It now appears as though the trade war has not ended, but rather both sides have agreed to not escalation tensions any further. The big hold up remains tariffs, and how China is demanding these be removed before agreeing to any proposal. Even with these tariffs in place we are seeing trade between the two parties, which is a positive sign.

When it comes to Chinese soybean demand, imports on a whole are down. In the month of September, China imported 13.5% fewer soybeans than in September of 2018. This is a direct result of ongoing African Swine Fever losses in hog production. China is still buying soybeans for reserve though, which is generating demand.

Economic data shows the trade war between the US and China is taking a toll on China. According to research from MidCo Commodities, consumer price inflation in China is up 3% from a year ago and has reached a 6-year high. This is a direct result of elevated food prices which have risen 11.2% in the past year. The majority of this is stemming from a 69% rise in pork values, the fastest rise in the past 12 years.

The NOPA crush report for September was released today with a much less than expected usage number. For the month, NOPA member crushed 152.6 million bu of soybeans, well below the average pre-report guess of 162.1 million bu. This decrease comes after two very large crush volumes in July and August. Soy oil stocks also built in the month, the first build in the past five crush reports. We did see a slight decrease to meal reserves though as the industry sees less competition in feed rations.

The EPA has released a statement regarding their proposed Biofuel Quota Plan. The big change from the current plan is it will grant partial hard-ship waivers for blenders from the current full-scale waivers being granted. The proposed plan would not change the mandated ethanol blend rate of 15 billion gallons for the years 2020 and 2021. Hopes are this will appease both the oil and renewable fuel industries. A hearing will be held on this proposal on October 30th, followed by a 30-day comment period.

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.