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Markets close higher for second week of July

Markets close higher for second week of July

Corn

Corn closed the week ending July 12 at 16 cents higher. Private exporters reported sale of 104,100 MTS of corn to Panama for 2019-20.

In the weekly export inspections report, U.S. corn exports for the week prior were 27.7 million bushels at the top end of market expectations and were up from the previous week's very poor exports of 11.2 million bushels. Corn exports were still below the roughly 35.3 million bushels per week estimated it needs to average through the end of August in order to reach the USDA's 2.200 billion bushels.

In the weekly crop progress/conditions report, U.S. corn conditions 57 percent good-to-excellent vs. 57 percent expected, 56 percent the week prior, 75 percent last year. Iowa was down 3 percent to 61 percent good-to-excellent; Illinois down 5 percent to 37 percent Indiana down 1 percent to 38 percent good-to-excellent; Minnesota up 2 percent to 60 percent good-to-excellent and Missouri down 1 percent to 28 percent good-to-excellent. South Dakota improved 4 percent to 62 percent good-to-excellent with North Dakota unchanged at 79 percent good-to-excellent.

In the monthly WASDE report, the USDA surprised the trade by raising U.S. corn ending stocks for both old and new crop. Old crop exports were lowered by 100 MB to 2.100 BB, lowered feed/residual by 25 MB and left ethanol usage unchanged at 5.45 BB. This resulted in an increase of ending stock stocks to 2.340 BB for 2018-19. For 2019-20, the USDA used the surveyed acreage number of 91.7 million acres and left yields unchanged from last month at 166 BPA. With the increased carry in stocks and minimal demand changes, new crop corn carryout is forecast at 2.010 BB. This was well above pre-report trade estimates, however the trade quickly discounted the news as the USDA is resurveying farmers.

Strategy & Outlook

With funds now going net long due to adverse weather conditions, producers should use the rally to exit old crop inventories and focus on marketing new crop supplies. July corn has failed at successive challenges of major weekly resistance.

Soybean

Soybeans closed the week ending July 12 at 38 cents higher. Private exporters did not report any export sales.

U.S. soybean exports of 27.8 million bushels were slightly lower than 26.5 million bushels the week prior and were slightly above last year's same-week exports of 24.5 million bushels. More importantly, they were slightly below the roughly 29.4 million bushels per week needed to average through the end of August in order to reach the USDA's 1.700 billion bushel export projection.

U.S. soybean conditions 53 percent good-to-excellent vs. 55 percent expected, 54 percent the week prior, 71 percent last year. U.S. soybean planting 96 percent complete vs 96 percent expected, 92 percent the week prior, 100 percent last year and 99 percent average. Iowa conditions were unchanged at 64 percent good-to-excellent; Illinois lost 6 percent to 38 percent good-to-excellent; Indiana was unchanged at 37 percent good-to-excellent; Minnesota down 1 percent to 61 percent good-to-excellent; Missouri down 3 percent to 35 percent good-to-excellent with South Dakota down 2 percent to 52 percent good-to-excellent and North Dakota up 2 percent to 69 percent. Soybeans had a largely uneventful report with minimal changes made to the old crop balance sheets. Total usage for 2018-19 was increased by 20 MB; resulting in ending stocks of 1.050 BB. Exports were left unchanged while crush was lowered by 15 MB and seed by 5 MB with residual usage up 41 MB.

For the 2019-20 marketing year, in addition to the lower beginning stocks, yields were lowered by 1 BPA to 48.5 BPA and planted acreage were lowered by 4.6 million, in accordance with the planting intentions report. This resulted in lower production by 305 MB and 325 MB less supply, offset by 75 MB reduction in exports. This lowered forecasted ending stocks from 1.045 BB to 795 MB. While it is a step in the right direction, it would be nearly double the second largest carryover figure in history.

Strategy & Outlook

With funds covering shorts due to adverse weather conditions, producers should use the rally to exit old crop inventories and focus on marketing new crop supplies.

 

Wheat

For the week ending July 12, Chicago wheat closed 6 cents higher, Kansas City wheat closed 22 cents higher and Minneapolis wheat 9 cents higher. Egypt bought 240,000 MTS of wheat from Romania and the Ukraine.

U.S. wheat exports for the week of 22.4 million bushels were down slightly from the previous week's 25.6 million bushels, but were notably above last year's same-week exports of 9.9 million bushels and were better than the roughly 16.4 million bushels per week needed to average in order to reach the USDA's 900 million bushel export projection.

U.S. winter wheat conditions were 64 percent good-to-excellent vs. 63 percent expected and 63 percent good-to-excellent the week prior.

U.S. winter wheat harvest reached 47 percent complete vs. 45 percent expected, 30 percent the week prior, 61 percent last year and 61 percent average. Kansas is 61 percent harvested, Missouri 79 percent harvested, Oklahoma is 95 percent and Texas 92 percent done. Illinois is 74 percent complete with harvest, Indiana 48 percent and Ohio only 29 percent complete.

U.S. spring wheat conditions 78 percent good-to-excellent vs. 76 percent expected, 75 percent the week prior and 80 percent last year, a solid 3 percent good-to-excellent increase vs. 1 percent expected. Minnesota is 83 percent good-to-excellent with North Dakota 82 percent and South Dakota 71 percent good-to-excellent. Wheat had minimal revisions for both old and new crop stocks, but wheat had the largest changes to world balance sheets and was the upside leader post the report.

For 2018-19, feed usage was increased by 41 MB while exports were 14 MB lower as well as imports. Ending stocks were lowered by 30 MB to 1.072 BB. For 2019-20, planted acres were down slightly to 45.6 million, but yields were increased to 50 BPA, an increase of 1.3 BPA. This resulted in an 18 MB increase in production, but the smaller beginning stocks made supply only 12 MB larger. From a demand side, feed usage was increased 10 MB and exports were increased by 50 MB. This resulted in a 72 MB cut in ending stocks to 1.000 BB. Traders bought wheat off the hopes that smaller world supplies would result in additional U.S. exports. The USDA lowered the Russian wheat crop to 74.2 MMTS, down from 78.0 MMTS last month and lowered their export forecast to 34.5 MMTS vs. 37.0 MMTS last month. The Australian wheat crop was lowered to 21.0 MMTS vs. 22.5 MMTS last month with exports at 12.5 vs. 13.5 MMTS last month and Canada wheat crop was lowered to 33.5 vs. 34.5 MMTS last month.

Strategy & Outlook

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

Live & Feeder Cattle

For the week ending July 12, live cattle closed $1.50 higher while feeder cattle closed $2.55 higher. The week prior, fed cattle trade occurred in the South at $110-$112, steady to $2 higher than the prior week.

Trade in the North was $182-$183, $2 to $3 higher compared to the prior week. Weekly steer weights were unchanged from the prior week at 854 pounds.

Net beef sales of 21,500 MT reported for 2019 were up 15 percent from the previous week and 26 percent from the prior four-week average. May beef exports were steady year-over-year in volume, while export value increased 1 percent to $727.6 million — the second-highest on record.

The Fed Cattle Exchange online auction saw 423 head offered for sale from three lots in Kansas. All three lots asked $111 and all lots went unsold.

The monthly Cattle on Feed report will be released on Friday, July 19, at 2 p.m. CST.

Strategy & Outlook

Producers can transfer all risk to the cash markets. Summer lows have been established and a sizeable rally should unfold.

Lean Hogs

Lean hogs closed the week ending July 12 at $3.65 higher. Weekly hog weights dropped to 280.2 pounds vs. 282.4 pounds the week prior and 278.4 pounds last year.

Net pork sales of 11,300 MT reported for 2019 were down 52 percent from the previous week and 53 percent from the prior four-week average. No new pork sales to China in the week ending July 5, but China took shipment of another 8,000 MT during the week.

U.S. pork exports for the month of May came in at 511.4 million pounds, down 0.84 percent from last year. This represented 23 percent of total production for the month.

Strategy & Outlook

Producers can move all risk to the cash markets.

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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