Morning Comments; Friday, December 7th, 2018

Corn and soybean values are mixed in the overnight session.

The majority of the agriculture news continues to surround US and China trade relations and the speculations of what outcome it will bring. Much of the focus has been revolving around what the impacts will be for the soybean complex. However, corn, ethanol and pork could be the largest beneficiaries to a deal.

Current corn values, after freight, are competitive to values sold out of government reserves without tariffs. Even though the USDA made a large 5 billion bu increase to Chinese stocks in the November report, many speculate that reserves are much lower than what was published, one well followed firm estimated 3 billion bu. A trade agreement would make imports of US corn feasible to add to China’s reserves.

In early November, China announced plans to mandate 10% ethanol blended with gasoline by 2020, which would be an increase of 8%. Continuation of ethanol imports as well as DDG’s would be a great benefit to the struggling ethanol sector.

While all of these factors could lead to increased demand for corn, the spread of African Swine Fever has decreased the potential demand to a large degree. The disease has decimated herds and demand for feed products. However, imports of US pork could get a large boost to help satisfy China’s large pork demand.

Market Movers; Trade news and Export sales.


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