Corn Morning Update & Commentary: Overnight, the corn market featured a little bounce after a two day, post-report thrashing, finishing two cents higher by the AM break. Some grumbling over lighter-than-expected rainfall totals may have helped generate....
Corn Morning Update & Commentary: Overnight, the corn market featured a little bounce after a two day, post-report thrashing, finishing two cents higher by the AM break. Some grumbling over lighter-than-expected rainfall totals may have helped generate the pop in this deeply oversold market. Iowa still on track to get a healthy drink later this week and into the weekend? 6-10 & 8-14 day maps continue to lean warm with average to above precip odds. Most of the Midwest has either pollinated or is pollinating - one month behind normal, of course. Some Crop Tours are around over the next week or so; not sure how many ears they are going to find?! Moving along, we will get some hard data in a couple hours in the form of the weekly EIA report, though we assume the market will have bigger fish to fry, position-wise. We think ethanol production will likely continue to retreat, given poor industry profitability, likely falling to the tune of 1-2% wk/wk. Blender demand should be firm, though we think residual disappearance will fall back to more "normal" levels. With that in mind, we would look for ethanol stocks to draw down again, likely to the tune of about -1.5%. As noted above, industry margins are poor; believe it or not, they have actually deteriorated further this week on the big corn break! We estimate an average Midwest ethanol plant is losing 30-40 cents/bu including all costs, or close to 15 c/gal. CME will take corn margins up 15%, which may kick out a few more "on the fence" longs?
The "Margin Man" came calling Tuesday; liquidation was apparent from the get-go; for example, popular "2 corn to 1 soy" spec trade has moved over $1 in two sessions! Against that back drop, Sept and Dec corn futures finished 19 and 16 cents lower, respectively, with losses tapering off the farther back one looked. Managed Money traders were viewed net sellers of another 40,000 corn today, which would likely put them "net short" the market for the first time since early spring. In the cash, interior markets were steady (shock 'n awe?) while CIF bids were slightly lower in spot slots. U.S. corn is dangerously close to being competitive again to Asian markets!? The cattle shell-out continued in the wake of the Tyson plant fire, trading "limit down" at expanded limits Tues. Hogs joined the parade, despite some positive China chatter around intraday. Dairy has held up surprisingly well throughout? Financial/macro markets were generally quite positive, in what some described as a record volume day. Back in the tubes today (Wed) on global recession concerns after bad data out of China and Germany? World weather influences remain mostly benign; Brazil getting ready to ship out a monster crop, though Argentina likely close to sold out, particularly given recent economic issues?
QT News - Top News
-- Grain traders on Wednesday reported South Korea based Feed Leaders Committee bought 65,000 mt of optional origin Corn at a snap tender today. They reportedly paid $200.99/mt cif. The grain is for delivery by January 2020. They had originally been seeking up to 69,000 mt of corn.
-- Grain traders on Wednesday reported South Korea based Nonghyup Feed bought 69,000 mt of optional origin Corn at a snap tender today. They reportedly paid $201.07/mt cif. The grain is for delivery by January 20, 2020. They had originally been seeking up to 69,000 mt of corn.
-- On Wednesday, Japan's Ag Ministry announced they are seeking 200,000 mt of feed barley and 120,000 mt of feed wheat at their weekly SBS tender to close on August 21st. The grain is for arrival by end of January 2020.
-- German farmer co-op Wednesday forecast 2019 winter barley production at 10.09 mln mt and spring barley crop at 2.01 mln mt. The 2019 corn crop is seen at 3.89 mln up +16.6% over last year's drought damaged crop.
-- Russian media carried comments from the country's agriculture minister saying there are no significant risks to this year's grain harvest in spite of several regions declaring extreme weather state of emergencies. The Russian ag ministry is still forecasting 118.0 mln mt of grain production this year.
-- Late Tuesday, the CME Group increased Corn futures margins for speculative traders by +15% to $1,150 per contract effective close of business Aug 14, 2019
-- Euronext Paris November corn futures Wednesday are trading +0.75 euro higher at 168.50 euros/mt
-- Dalian January corn futures Wednesday traded -1 yuan lower ending at 1,911 yuan/mt
-- Outside markets. Crude Oil off -$1.36 @ $55.74; Gold up +$9.30 @ $1523.40; Silver up +14.0c @ $17.125; US $ index off -2 pt @ 97.60
QT News Cash Markets
Bean Barge Corn Barge SRW Barge HRW Track Ill Riv Frt
12 pro 11 pro
Aug +35/37 X +40/?? U +65/73 U +163/173 U +125/135 N 525/575
Sep +25/29 X +39/44 U +75/84 U +163/170 U +125/132 N 400/425
Oct +24/27 X +35/40 Z +75/85 Z +155/162 Z +125/132 U 435/450
Hi-pro meal Soy oil
Chicago -20 X +25 U +15 U
Toledo -20 X +40 U +25 U
Dec ILL -18 X +28U -16 U +50 U