Export Demand Destruction and the E15 "Nothingburger"

Many analysts are beginning to speculate about the long-term damage that the current trade war will have on Ag commodities specifically soybeans. All previous politically driven trade actions have resulted in export demand destruction. This action should be no different. For that reason producers should consider carefully the storage prospects for soybeans. Values are up 70 cents per bushel from the September lows. For now, that may be all we can ask of this market. We need a solid indication of export demand rebuild before this market can overcome the bearishness of a large US crop.

Support in November soybeans is 862. We actually had a bullish cross of the 20 and 50 day moving averages at 857 offering additional support there. Overhead resistance is the 100 day moving average at 884. The market is a bit overbought and is vulnerable for additional correction lower. No upside targets are apparent.

The big news in corn recently has been the President’s announcement that he was going to “allow” E15 in summer blend gasoline. To quote Scott Irwin, Ag Economist, University of Illinois, this announcement is a “nothing burger”! I look at it as a “nothing burger with cheese”. The announcement in itself was the cheese on the nothing burger in light of the fact that no previous administration would even consider year-round E15. The nothing burger comes in the details of how E15 can be enabled. The process could take as long as 5 years according to Dr. Irwin. Dr. Irwin’s comments can be found here from a recent podcast on Market to Market.

E15 aside, world corn stocks to use ratio is historically low, therefore if the corn market can detach itself from the miserable soybean market we have prospects of higher values ahead. Support in December corn is 365. We have seen the same bullish cross in the 20 and 50 day moving average at 365 ½. Resistance is the 100 day moving average at 371. Target 375 for a short term sale. 385 should be an achievable goal longer term.

The story in wheat is Ukraine and US planting progress. Analysts believe the export pace out of eastern Europe is much too aggressive and must curtail soon. US wheat seeding should fall below expectations with wet Midwest weather. The market is pacing sideways. No sales targets at this time.