CORN — ANALYSIS — Corn closed the week 1 3/4 cents lower. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 21.7 mb (551,800 mt) with 16.2 mb (412,100) sold for the 2016-2017 marketing year. This was above the 8.5 mb (215,400 mt) needed this week to be on pace with USDA's May demand projection of 2.225 bb. In the weekly crop progress report, NASS reported U.S. corn crop conditions at 65 percent good/excellent vs 68 percent expected (65-71 percent range of ideas) and 72 percent last year. This was the lowest late May conditions in five years and below the 10 year average of 69 percent Historically, ratings below 70 percent g/e do not translate into above trendline yields. U.S. corn planting is virtually complete at 91 percent vs 92 percent expected (89-96 percent range of ideas), 84 percent last week, 93 percent last year and 93 percent average. In the weekly EIA report, U.S. ethanol production rose to 1.020 million barrels/day (300 million gallons/week) from the previous week's 1.010 mbpd (297 mil gal/week) and a rather solid 6.3 percent above last year's same-week production of 960k bpd. U.S. ethanol stocks posted a modest increase last week to 956 million gallons (22.763 million barrels) from 953 million gallons.

The market will want to be bullish as the key pollination time period is directly ahead of the market, however, it will take weather concerns during June to ignite a rally. Producers will want to use options as a way to manage risk and provide price insurance. This will enable producers to make sales and cover the upside if weather is adverse.

STRATEGY & OUTLOOK

Look to make sales and lock in prices during rallies over the next 6 weeks.

 

SOYBEANS — ANALYSIS — Soybeans closed the week 2 1/2 cents lower. Last week, private exporters reported a sale of 130,000 mts of soybeans to an unknown destination and 200,000 mts to Spain.

Weekly export sales of soybeans showed a total of 23 mb (626,200 mt) with 22.4 mb (610,200 mt) for the 2016-2017 marketing year. This raised total sales to 2.147 bb, 5 percent above USDA's May demand projection of 2.050 bb. The weekly crop progress report showed NASS reported U.S. soybean plantings at 67 percent complete vs 68 percent expected (60-75 percent range of ideas), 53 percent last week, 71 percent last year and 68 percent average. With the crop getting planted, the market will be quick to add weather premium if adverse weather develops. The month of June is not the key reproductive month for soybeans, however, the market will be quick to add a premium into prices on less than ideal weather. Rains after June 15 will be viewed as beneficial to crop development and negative for prices. However, dryness in the month of June will send prices sharply higher.

STRATEGY & OUTLOOK

Producers need to make new crop sales on rallies during the next six weeks as large supplies of product will be hitting the market from not only the U.S. but also from South America.

 

WHEAT— ANALYSIS — For the week, Chicago wheat closed 9 3/4 cents lower; Kansas City wheat closed 4 1/4 cents lower and Minneapolis wheat 15 cents higher. Last week, Egypt bought 120,000 mts of Russian and Romanian wheat.

Weekly export sales for all wheat showed a total of 28.7 mb (781,300 mt) including a 1.1 mb (20,000 mt) net reduction for the 2016- 2017 marketing year. Total marketing year sales were 1.042 bb, 1 percent above USDA's May projection of 1.035 bb. In the weekly crop progress report, U.S. winter wheat crop saw conditions fall to 50 percent good/excellent vs 52 percent expected (52-53 percent range of ideas), 52 percent last week and well below the 63 percent last year. U.S. spring wheat crop conditions were 62 percent good/excellent vs 71 percent expected (65-75 percent range of ideas) and 79 percent last year. This was the second lowest late May conditions of last nine years. U.S. spring wheat planting is 96 percent complete vs 96 percent expected (95-98 percent range of ideas), 90 percent last week, 98 percent last year, 91 percent average. The 2017 hard red winter wheat harvest continues to be slow due to rain in Texas and Oklahoma. Harvest in Texas is 27 percent complete. In Oklahoma, the overall percentage harvested is now 16 percent complete. Reports show overall yields of 20 bu/ac to 40 bu/ac, but have ranged from under 20 bu/ac to over 50 bu/ac (1.3 tons/ha to 3.4 tons/ha) in some areas. Protein levels than are currently less than desired. This will have millers buying Minneapolis spring wheat to blend with the lower protein winter wheat and will force a premium into prices. Dry weather in key spring wheat states is threatening spring wheat yields.

STRATEGY & OUTLOOK

Look to make sales and lock in prices during rallies over the next 6 weeks.

 

LIVE CATTLE — ANALYSIS — Last week, live cattle closed $7.45 higher while feeder cattle closed $12.22 higher. Last week, sharply higher cash trade occurred at $216 and $217, $6 to $9 higher than the previous week. Southern trade developed $136 to $137/cwt, $4 to $5 higher than the previous week. Last week's Fed Cattle Exchange online auction saw 1,257 head trade hands, out of the 2,067 on the list (60.81 percent sold). The weighted average price from the total auction sales was $131.474 vs $132.539/cwt. last week. Net sales of 12,100 MT reported for 2017 were up 69 percent from the previous week and 15 percent from the prior four-week average. USDA steer carcass weights were unchanged from the previous week at 836 pounds and remain well below last year at 26 pounds below last year. Seasonally steer carcass weights will bottom in May and start to move higher into the fall.

STRATEGY & OUTLOOK

Producers with cattle to market this summer and fall should be transferring risk with put options. Feed costs for the year should be locked in for the entire year.

 

LEAN HOGS — ANALYSIS — Lean hogs closed the week 40 cents higher. Net sales of 13,800 MT reported for 2017 were down 22 percent from the previous week and 15 percent from the prior four-week average. Hog weights were unchanged from the previous week at 280.2 pounds and remains below last year’s 282.2 pounds. For 2017, total U.S. meat exports are up 482 million pounds or 14 percent year-to-date from 2016. For the first quarter of 2017, U.S. beef exports are up 22 percent, U.S. pork exports are up 17 percent and U.S. poultry exports are up 9 percent.

STRATEGY & OUTLOOK

Producers should have hedged 2017 production as prices tested weekly chart resistance. 2017 feed costs should be locked in for the entire year.

Midwest Market Solutions is the leading edge in commodity marketing and trading. It was established in March 2002 and is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien. The firm specializes in individual trading strategies for the investor, personalized marketing programs for individual farm operations as well as full-service and discount broker services. The home office is located in Springfield, Mo., with branch offices in Yankton, S.D.; Storm Lake, Iowa; Alvord, Iowa; Thief River Falls, Minn., Verona, N.D., and Springfield, Neb. Midwest Market Solutions is committed to providing clients with the best information and service as possible. Midwest Market Solutions provides clients with written newsletters, trade research and hedging as well as trading advice.

Brian Hoops is president and senior market analyst of Midwest Market Solutions. Brian can frequently be heard on radio stations across the country including KWMT, KAYL, KKIA, Ag News 890, Red River Farm Network and Commodity Wrap on Sirius XM radio. Brian can also be heard daily on DTN, is seen as a frequent guest on RFD-TV and is heard on the Minneapolis Grain Exchange marketing hotline. Brian also writes several newsletters that are published throughout the Plains and the Midwest, covering the states of Iowa, Minnesota, North and South Dakota, Nebraska, Kansas, Montana, Wisconsin, Wyoming and Idaho. Brian has been quoted in the Wall Street Journal, Bloomberg, Reuters and Dow Jones newswires and U.S. Farm Report.

Daily market commentary and trade recommendations are available at www.midwestmarket-solutions.com or by e-mail at bhoops@midwestmarketsolutions.com. Hoops can be contacted at 417-501-5132. (Copyright 2016 Midwest Market Solutions Inc.)

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.