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Markets: Ethanol production rises dramatically, stocks remain lowest since 2014
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Markets: Ethanol production rises dramatically, stocks remain lowest since 2014

CORN------

Corn closed the week 10 ¾ cents higher. Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. corn exports came in at 62.4 million bushels (mb). Corn inspections need to average 51.7 mb for the remainder of the marketing year to reach the new revised USDA forecast. 

The USDA US corn plantings reached 4% complete, up from 2% last week, 3% last year, and the average pace of 3%.

In the weekly Energy Information Adminstration report, U.S. ethanol production declined to 941,000 barrels per day (bpd) from 975,000 bpd and was a massive 65% higher than last year's same-week production of 570,000 bpd. U.S. ethanol stocks last week ticked down to 862 million gallons (20.518 million barrels) from 867 million gallons (20.642 mil barrels) the week prior, the 7th decline in stocks over the last 8 weeks. Ethanol stocks remain the lowest for mid-April since 2014.

Strategy and outlook: With new highs recorded and the next fundamental news focusing on spring planting, producers should consider accepting profits on long positions and begin to hedge 2021 production and establish a minimum price floor. Look for highs to be made in the spring to summer timeframe.

 

SOYBEANS------

Soybeans closed the week 30 cents higher. Private exporters announced sales of 132,000 metric tons (mts) of soybeans to China and 110,000 mts of soybeans to Bangladesh. 

In the weekly export inspections report, US soybean inspections came in at 12.1 mb versus 8.2 mb needed to reach the USDA forecast.

The National Oilseed Processors Association crush report showed NOPA crush for the month of March came in at 177.984 mb, below estimates of 179.2 mb. This was a sharp increase from last month’s 155.2 mb but is below year-ago levels of 181.4 mb. Soybean oil stocks were 1.771 billion pounds, below estimates of 1.822 bp versus 1.757 last month and 1.899 last year.

Strategy and outlook: Producers should maintain their re-ownership positions and look for highs to be made in the spring to summer timeframe. That is when final cash sales should be made and minimum price floors should be locked in for next fall's harvest.

 

WHEAT-------

For the week, Chicago wheat closed 14 ¼ cents higher, Kansas City wheat closed 21 ¼ cents higher and Minneapolis wheat 9 ¼ cents higher. Last week, exporters did not report any export sales. 

In the weekly export inspections report, U.S. wheat inspections came in at 16.8 m, slightly above the 15.8 mb needed to reach the USDA forecast. 

In the weekly crop progress and conditions report, U.S. spring wheat seedings advanced to 11% complete versus 3% last week, 5% last year, and 6% on average. Winter wheat conditions were unchanged at 53% g/e, down from 62% last year. 

Strategy and outlook: Dry conditions in the Dakotas, Montana, and Northern Minnesota are fueling the buying interest while potential cold conditions in the winter wheat Plains have rallied Kansas City and Chicago futures.

 

LIVE CATTLE-----

Last week, live cattle closed $3.50 lower while feeder cattle closed $6.50 lower.

Last week, light to moderate volumes of fed cattle traded in the North at mostly $123 to $124 live, with a few up to $126, and $196 dressed. Prices were primarily steady to $1 higher than last week. Moderate trade in the South occurred at mostly $120 to $121 – steady with last week.

Last week, the Fed Cattle Exchange had 3,966 head listed for a Wednesday sale and 4,284 head listed for sale on a Thursday sale. No sales were reported. 

The latest USDA steer carcass weights were down 5 pounds from the prior week at 894, making them 3 pounds above last year. 

Last week's beef export sales saw a net sales of 17,200 mts with shipments of 19,000 mts reported.

Strategy and outlook: Producers should have window or fence strategies to protect the downside but allow for upside potential as tight supplies in the 2nd and 3rd quarters should be bullish for values.

 

HOGS----

Lean hogs closed the week $7.27 lower. 

Iowa/S. Minnesota weekly hog weights saw a slight uptick to 287.4 pounds from 287.3 pounds the week prior versus 284.9 pounds last year.

Last week's net pork sales of 17,200 mts, a marketing-year low, with shipments at 38,600 mts. 

Strategy and outlook: Strong exports and tightening supplies will allow for higher prices into the spring and summer months. Producers can manage risk by using put options that leave upside potential available.

 

Michael Baron provides estate planning guidance at Great Plains Diversified Services in Bismarck, North Dakota. Email him at KeeptheFamilyFarm@gmail.com.

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