September 19, 2019
The concerns about crude oil and continued strength in the U.S. dollar is doing very little to help the macro commodity landscape.
Weather here at home remains mostly cooperative and there's still no sign of any type of meaningful cold-snap in the into mid-October. Weather in South America seems to be more interesting as bulls point towards many areas needing heavy rains. Forecasters are showing upcoming showers for many of the drier areas in northern Brazil but overall most inside the trade believe that soil moisture levels will remain mostly deficient and in need of additional rainfall. From my perspective, however, it seems like the dry conditions in Argentina will become more of a talking point for the bulls in the weeks ahead than the current dry conditions in Brazil. We now have to have South American weather on our radar.
Demand remains in question, but we are seeing some improved ethanol margins and a big sale to Mexico might help elevate some nearby concern. Keep in mind, President Trump is said to be meeting with other Washington leaders today about U.S. biofuel policy so there could be some changing dynamics in the days ahead. I also expect to see strong weekly export sales number this morning as Mexico has recently purchased over +40 million bushels. Unfortunately, ending stocks both here at home and in Argentina will remain plentiful. At the same time, several sources are forecasting a +102 MMT corn crop for Brazil in 2020.
There have been some interesting headlines of late circulating around Chinese corn supply. In 2017 it was estimated that the Chinese had +200 MMTs of corn in reserves, more recent estimates suggest Chinese corn supply is down around 56 MMTs. Still, bears are thinking the upcoming USDA Quarterly Stocks Report, scheduled for release on September 30th, could show more burdensome supply and keep a lid on most nearby rallies.
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The opinions of Kevin Van Trump are not necessarily those of Corn and Soybean Digest or Farm Progress.
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