Corn
Bull points
• U.S. exports expected to be very strong.
• Lower global wheat stocks could open more feeding capacity to corn.
• Funds have started to cover shorts, which has helped push prices above $3.70 resistance in CZ8.
• Potential increased demand with year round E15 blending.
Bear points
• Domestic stocks are still adequate and plenty of stocks around.
• Harvest movement and hedge pressure still to come.
• Trade talks in beans remain unconstructive and could continue to hold corn back.
• Brazilian planting off to a record pace.
Soybeans
Bull points
• Funds have started to cover some of their short.
• Wet weather has slowed harvest in many areas and is causing some sprouting and pods to open.
• Record crush margins will keep processors running at capacity.
• New U.S., Mexico, and Canada trade deal reached.
• U.S. will continue to fill the rest of the world’s export demand in China’s absence.
Bear points
• USDA soybean yield at 53.1 bpa. Current 18/19 carryout is 885 million bushels.
• No progress between the U.S. / China trade war. Some think they could meet at the G20 Summit at the end of November.
• South America is expected to plant record acres of soybeans.
• Harvest could draw out for several weeks, given how wet some areas are.
Transportation Update
Trucking: The trucking industry remains at full utilization where it has been since August 2017. Due to seasonality, a slight decrease in utilization may occur, however the industry will remain above 95% which is considered an extremely tight market. A tight labor market and very strong economy remain the key factors.
Rail: Rail service has stabilized, but remains below historical averages. Railroads continue to do “less with less” and are handling similar volumes to 2014 but with 16% fewer train & engineering employees. Railroads are increasing scrutiny on the number of private cars being held on railroad owned track. This is leading to potential embargoes and increased demurrage.
Mitigating Actions:
- Continue to avoid short lead orders and minimize order changes
- Timely unloading of trucks
- Disciplined approach to rail pipelines to avoid a surplus of cars held on railroad track
Stay flexible
Source: http://www.usda.gov/oce/commodity/wasde/latest.pd7