ethanol

Evaporators at the cellulosic ethanol plant in Emmetsburg, IA

Corn closed the week 4 3⁄4 cents lower. Private exporters reported 135,000 metric tons to an unknown destination.

Weekly export sales showed a total of 22.8 million bushels with 3.6 million for the 2016-2017 marketing year. This was above the 1.6 million bushels needed this week to be on pace with USDA’s July demand projection of 2.225 billion bushels.

In the weekly crop conditions report, the National Agriculture Statistics Service reported U.S. corn crop conditions at 62 percent good or excellent, down from 64 percent last week and well below 76 percent last year. Iowa fell 3 percent, Nebraska 4 percent, but Illinois and Minnesota were both 1 percent higher.

In the Energy Information Agency report, U.S. ethanol production slipped to 1.012 million barrels per day from 1.026 million the previous week. U.S. ethanol stocks dipped to 904 million gallons from 930 million gallons the previous week. If weather would turn hot and dry in the final kernel filling stage, we would have one final rally this summer.

Weather must turn adverse before Aug. 25, because after this date, our key yield development time will be over.

On the flip side, an early frost during the kernel filling stage would also send prices higher as a killing frost could potentially hurt yields. Seasonals show a small rally during the August timeframe, before turning lower as harvest begins in September.

Look for commercial and end user interests to become buyers during the early stages of harvest as they will try to buy when the basis levels are largest.

Strategy and outlook: Producers should make sales that address cash flow need during harvest.

SOYBEANS

Soybeans closed the week 9 1⁄4 cents lower. Private exporters reported sale of 264,000 metric tons to an unknown destination.

Weekly export sales showed a total of 30.7 million bushels with 11.1 million for the 2016-2017 marketing year. This raised total sales to 2.219 billion bushels, or 6 percent above USDA’s July demand projection of 2.1 billion.

Soybean crop conditions also were down to 57 percent good or excellent vs 61 percent last week and 71 percent last year. Iowa was down 1 percent, while Nebraska and South Dakota fell 4 percent. Illinois was down 8 percent and Minnesota remained unchanged.

August is the key yield development month for soybeans, not July. For new crop soybean pricing, ignore demand signals as weather and its impact on the developing crop remains 95 percent of our pricing influence.

By Aug. 30, soybeans will have completely filled the pod, and seasonal highs will be in. Beans need moisture in the pod setting stage to achieve normal yields and forecasts into early August are for cool and wet conditions. However, hot and dry conditions will force moisture to the root system, leaving the bean in the pod to develop small. The soyoil content is what suffers most, leaving bean oil undervalued if hot and dry conditions set in across the Midwest.

Seasonally, soybeans post lows in the month of August in the first half of the month and rally into Labor Day where the highs will be formed before harvest pressure weighs on the market.

Strategy and outlook: Producers should make sales that address cash flow need during harvest.

WHEAT

Chicago wheat closed 19 3⁄4 cents lower, Kansas City wheat closed 15 cents lower and Minneapolis wheat closed 25 1⁄4 cents lower. Private exporters did not announce any private sales.

Weekly export sales for all wheat showed a total of 18.3 million bushels, all for the 2017-2018 marketing year. This was above the 13.7 million needed in the recent report to be on pace with USDA’s July demand projection of 975 million.

Spring wheat crop conditions fell to 33 percent good or excellent from 34 percent last week and 68 percent last year. Winter wheat harvest is now 84 percent complete versus 75 percent last week, and 82 percent last year.

During August, the spring wheat harvest will begin in the upper Plains states of Montana, North and South Dakota and Minnesota.

Once the spring wheat crop is harvested, demand indicators will move to the forefront of pricing. Spring wheat should have a post-harvest rally after harvest progress reaches 30 to 50 percent completed. If wheat in Canadian wheat prairies produces a smaller crop, look for U.S. millers to buy Minneapolis spring wheat futures to cover their milling needs.

Strategy and outlook: Look to sell the carry in winter wheat.

LIVE CATTLE

Live cattle closed $5.17 lower, while feeder cattle closed $7.22 lower.

Fed cattle trade in the South was established at $117, $3 lower than last week. Cattle in the North traded at $117 to $118, $2 to $3 lower compared to the week before. Dressed cattle in the North traded at $186 to $188, steady to $2 lower.

The weekly Fed Cattle Exchange online auction was held and was a light test week again with 772 head traded, out of the 2,119 on the list, or around 36 percent sold.

The weighted average price from the total auction sales was $117.67 vs $118.27 from the previous week’s auction.

USDA steer carcass weights are down one pound from last week at 865 and are 15 pounds below last year. If weights to continue to increase, third quarter production is expected to increase to a seven-year high and fourth quarter supplies should be record large. Net sales of 12,400 metric tons reported for 2017 were down one percent from the previous week and 14 percent from the prior four-week average.

Strategy and outlook: Producers with cattle to market this fall and winter should have transfered risk with options on rallies.

HOGS

Lean hogs closed the week 82 cents lower. Net prok sales of 11,700 metric tons reported for 2017 were up 21 percent from the previous week, but down 36 percent from the prior four-week average.

Weekly hog weights were 276.8 pounds, down from 278 pounds from the prior week and are 0.9 pounds below last year’s level of 277.7 pounds. In the monthly cold storage report, total red meat supplies in freezers were down 3 percent from the previous month and down 7 percent from last year.

Total pounds of beef in freezers were up one percent from last month but down 10 percent from last year. Frozen pork supplies were down 5 percent from the previous month and down 6 percent from last year.

Strategy and outlook: Pork producers should have hedged 2017 production as prices tested the weekly chart resistance.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc., based in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb. Hoops can be reached at 417-501-5132.

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