The following quotations for the months as indicated were posted by the CME at close of trading on Friday December 28th together with values for the reference months in parentheses confirming a relatively static market for corn, soybeans and soybean meal in comparison to the previous week. There is continuing disappointment that China has placed orders for only 1.5 million metric tons of soybeans. This was lower than the 3 to 5 million metric tons anticipated as part of the "substantial quantity" arising from the December 1st dinner meeting between the two Presidents.









Corn (cents per bushel)

March'19 376 (378)

May '19 384 (386)

Soybeans (cents per bushel)

Jan. '19 883 (883)

March '19 897 (896)

Soybean meal ($ per ton)

Jan. '19 309 (306)

March '19 314 (310)

Changes in the price of corn, soybeans and soybean meal were:-



Corn: March'19 quotation down 2 cents per Bu. (-0.5 percent )

Soybeans: Jan. '19 quotation unchanged ( -- )

Soybean Meal: Jan. '19 quotation up $3 per ton (+1.0 percent)

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

  • For each $10 per ton change in the price of soybean meal:-

The cost of egg production would change by 0.40 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

There is diminished optimism concerning the outcome of the dinner meeting at the G-20 Summit between the delegations from the U.S. and China led by their respective Presidents. The U.S. has agreed to a three-month delay ending March 31st before raising tariffs from ten percent to twenty-five percent on over $200 billion in annual imports from China. In return China has agreed to purchase an unspecified quantity of agricultural commodities in addition to energy and heavy equipment from the U.S. to offset the negative balance of payments. An initial order of 1.5 million tons was placed, three weeks ago, the first since June.

China has voiced negative sentiments concerning a resolution of issues despite the need to resume tariff-free exports to the U.S. Public statements by uber-sinophobe Dr. Peter Navarro are equally unhelpful. Negotiations will continue to resolve the major structural issues impacting trade and the concerns raised by the U.S. concerning coercive practices, cyber-espionage and theft of intellectual property. The clock is still ticking!

According to the November 8th 2018 WASDE Report #583, which did not affect commodity prices, 81.8 million acres of corn will be harvested in 2018 to produce 14.62 Billion bushels. The soybean crop is projected to attain 4.60 Billion bushels from 88.3 million acres harvested. The levels of production for the two commodities are based on revised projections of yield and acreage harvested. Ending stocks were revised based on anticipated domestic use and exports.

See the WASDE posting summarizing the November 8th USDA-WASDE Report #583 under the STATISTICS tab documenting price projections and quantities of commodities to be produced, used and exported from the 2018 harvest

Quarterly corn and soybean stocks were estimated by USDA in the last release for 2018 on September 28th to total 2.14 Billion bushels (14.7 percent of the 2017 harvest) and 0.44 Billion bushels (10.0 percent of 2017 harvest) respectively. Of the "old soy crop" 0.10 Billion bushels are held as on-farm storage, up 15 percent from the corresponding period in 2017. Off-farm storage is up 58 percent to 0.34 billion bushels. Disappearance from June to August was 0.78 Billion bushels, up 18 percent from the corresponding period in 2017. This reflects accelerated shipments in anticipation of increased tariffs imposed by China. From August through November soybean exports to China ceased.

Unless shipments of corn and soybeans to China resume in volume the financial future for row-crop farmers appears bleak despite the release of two tranches amounting to $12 billion as "short-term" compensation. Farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. Oversupply of ethanol with the current 10 percent addition (=dilution) mandate is evident from the December 28 th spot price of $1.25 per gallon compared with a 2018 peak in late March of $1.60. Exports have been constrained by the retaliatory tariffs imposed by China on U.S. ethanol. Some refiners are reducing production and mothballing corn- fermentation plants.

The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. It must be recognized that the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift that keeps on giving. The mandate is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.