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Markets close first week of April on higher note

Markets close first week of April on higher note

Corn

Corn closed the first week of April 5 cents higher. Private exporters did not announce any export sales.

U.S. corn exports, for the week ending March 29, were strong at 49.6 million bushels, easily besting market expectations and rising from the previous week’s 39.2 million bushels. Corn exports exceeded the average “needed” shipment pace of roughly 42.5 million bushels per week in order to reach the USDA’s 2.375 billion bushel export projection for the first time in 10 weeks, but were still below last year’s same-week exports of 56.9 million bushels. U.S. ethanol production posted the first increase in four weeks to 999,000 barrels per day (294 million gallons per week) from 975,000 bpd (287 mil gallons per week) the week prior, it was still a solid 3.8 percent below last year’s same-week production of 1.038 million bpd, reflecting the seventh consecutive week of production below year ago levels. U.S. ethanol stocks slipped to 1.008 billion gallons (23.992 million barrels) from 1.027 billion gallons (24.448 million barrels) the week prior, but were still 7 percent (66 million gallons) above last year’s same-week stocks of 942 million gallons and maintained record levels on a same-week basis being above 2017’s 996 million gallons.

Midwest U.S. producers will begin seeding corn acres by mid-April and weather will become very important to pricing by May. If the month of April is wet and hampers producers’ planting efforts, look for December corn to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Strategy & Outlook

Producers should use options to re-own and manage risk. Weather-related rallies are selling opportunities.

Wheat

For the week ending April 5, Chicago wheat closed 8 cents higher, Kansas City wheat closed 1 cent higher, and Minneapolis wheat 32 cents lower. No private export sales were announced.

The 15.4 million bushels of exported U.S. wheat were within market expectations — little-changed from the previous week’s 14.1 million bushels and last year’s same-week exports of 15.6 million bushels. However, wheat shipments continue to regularly run below the average weekly needed pace of around 26 million bushels per week. Wheat exports over the final nine weeks of the marketing year last year averaged just 16.0 million bushels per week, indicating the need for shipments over the last two months of 2018-19 to run nearly 64 percent stronger than those of a year ago if the USDA’s 865 million bushel export projection is to be reached.

The first U.S. winter wheat conditions of the year are rated at 56 percent good-to-excellent (9 percent poor-to-very poor) vs. 32 percent good-to-excellent (30 percent poor-to-very poor) last year and 55 percent good-to-excellent (13 percent poor-to-very poor) last fall. Overall, U.S. winter wheat crop conditions are the best in early April than they’ve been the last three years and tie for the second best to start the spring season of the last nine years. HRW conditions are well above those of the last two years and tied for the best early April conditions of the last nine years. Meanwhile, SRW conditions are very poor given the excessive wetness in many areas. Overall, SRW conditions are the lowest for early April since 1999.

Strategy & Outlook

The huge world supplies of wheat mandates producers to sell out inventory and use options to manage risks on sharp rally attempts.

Soybeans

Soybeans closed the week ending April 5 at 14 cents higher. Private exporters announced sale of 828,000 mts of U.S. soybeans to China.

U.S. soybean exports last week of 26.9 million bushels were within market expectations, but were down from the previous week’s 31.6 million bushels and were below the average needed export pace of 31.3 million bushels per week in order to reach the USDA’s 1.875 billion bushel project, the first time that has occurred in 12 weeks. The average needed pace reflects a 27 percent increase from last year’s 24.6 million bushel per week average. 

The quarterly stocks report and world ending stocks ensure the world has an adequate supply of soybeans and the market is not signaling to producers to increase seeded acres in 2019. However, a planting season that is slowed by heavy rains will encourage farmers to switch plantings of corn over to soybeans, the last thing the soybean market needs.

Strategy & Outlook

Producers should use options to re-own and manage risk. Weather-related rallies are selling opportunities.

Live & Feeder Cattle

For the week ending April 5, live cattle closed $1.47 higher while feeder cattle closed $1.10 higher.

Cash trade was reported with Northern dressed business marked at $206, steady to $1 lower than the prior week’s trade, while cattle trade occurred in the South at $124, $1-$2 lower than prior week. The Fed Cattle Exchange online auction offered 513 head for sale in yards from Kansas and Oklahoma. Cattle were offered at $126 with no trade reported. Net beef sales of 20,500 MT reported for 2019 were up 58 percent from the previous week and 18 percent from the prior four-week average. Weekly steer weights were up 1 pound at 866 pounds vs. 865 pounds last week vs. 878 pounds last year.

Strategy & Outlook

The large concentration of large spec open interest indicates producers need to be hedging summer and fall contracts with futures and options.

Lean Hogs

Lean hogs closed the week ending April 5 at $11.47 higher.

African swine fever continues to pose a problem, with another province in China reporting an outbreak. China’s ag ministry will now require pork processors to test for presence of the virus starting May 1.

Weekly hog weights were reported at 286.1 pounds vs. 286.0 pounds the week prior and 286.5 pounds a year ago. Net pork sales of 10,800 MT reported for 2019 were down 50 percent from the previous week and 66 percent from the prior four-week average.

Strategy & Outlook

Producers should now be transferring risk after such a massive rally in prices.

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 2019 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.

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A Kansas native, Katy is the daughter of a farmer and a cowgirl. She has been a professional journalist since 2008 and is the Editor of Midwest Messenger. She can be reached at katy.moore@lee.net.

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