For the week ending Dec. 14, Chicago wheat closed 2 cents lower, Kansas City wheat closed 6 cents higher and Minneapolis wheat 2.5 cents higher.
In early December, Egypt bought 120,000 metric tons of Russian wheat and 60,000 MT of Ukrainian wheat.
Weekly export sales for all wheat totaled 27.7 million bushels (754,100 MT) for 2018-19. Total commitments of 601 MB in 2018-19 are down 10 percent from a year ago. Demand is the major driving force for wheat prices, with a higher U.S. dollar showing a direct correlation to the drop in wheat values.
In the monthly World Agricultural Supply and Demand Estimates report, U.S. wheat exports fell 25 MB to 1.0 billion bushels. This increased the U.S. carryout to 974 MB. World wheat supply increased 1.39 million metric tons to 268.10 MMT. Canada’s wheat production rose to 31.80 MMT, while Australia’s wheat production fell to 17 MMT from a dry weather season. Russia continues to be an exporter of wheat, contrary to rumors they will limit their export profile due to smaller inventory. Demand for U.S. wheat will be the key for price direction until the January acreage report and the spring when winter wheat breaks dormancy.
Strategy and outlook
The huge supplies of wheat mandates supply issues to provide rallies. Look to sell out inventory and use options to manage risks on sharp rally attempts.
Corn closed the week of Dec. 14 unchanged. In early December, private exporters announced sales of 125,000 MT (4.9 MB) of corn to Japan and 1.646 MMT (65.4 MB) of corn to Mexico.
In the weekly export sales report; for the week ending Dec. 6, USDA reported 35.6 MB (903,200 MT) of corn export sales for 2018-19 and 6.4 MB (161,400 MT) for 2019-20. Total commitments of 1.088 BB in 2018-19 are up 16 percent from a year ago.
In the weekly Energy Information Administration report, U.S. ethanol production, for the week ended Dec. 7, declined to 1.046 million barrels/day (308 million gal/week) from 1.069 mbpd (314 million gal/week) the week prior and was 3.9 percent below last year's same-week production of 1.089 mbpd (320 mil gal/week), the largest percentage year-over-year deficit in weekly production going back 48 weeks to the first week of January. Crude oil stocks declined 1.2 million barrels vs. expectations of 3.5 million barrels.
In the monthly supply/demand report, U.S. corn carryout rose to 1.781 BB, up 45 MB from the November Crop Production report. U.S. corn decreased demand by 50 MB for both ethanol and domestic use. They also lowered imports by 5 MB, resulting in the 45 MB increase. The corn world production increased 1.29 MMT to 308.80MMT. Ukraine, FSU-12 and the EU had adjustments to their corn production numbers.
Strategy and outlook
Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don't store unpriced crop.
Soybeans closed the week of Dec. 14 at 16 cents lower.
Last week, private exporters announced sales of 365,00 MT of soybeans to an unknown destination; 130,632 MT of soybeans to Mexico and 1.43 MMT of soybeans to China.
In the weekly export sales report, USDA reported 29.1 MB (792,300 MT) of weekly soybean export sales for 2018-19 and 100,000 bushels (3,000 MT) for 2019-20. Total commitments of 916 MB in 2018-19 are down 34 percent from a year ago.
In the monthly supply/demand report, the U.S. soybean carryout also stayed the same at 955 MB. The world carryout jumped 3.25 MMT to 115.33 MMT. Brazil had majority of this increase as they are expected to have an exceptional crop this year at 122 MMT.
CONAB raised Brazil's soybean forecast to 120.1 MMT vs. 118 MMT previously and Brazil's corn forecast to 91.1 MMT vs. 90.5 MMT.
Strategy and outlook
Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don't store unpriced crops.
Live and feeder cattle
Last week, live cattle closed $1.05 higher while feeder cattle closed $2.95 higher. Last week, fed cattle trade had a firm undertone with prices steady to $1 higher. There was some dressed trade in Nebraska at $187. Prices the prior week were mostly $118 to $119 live and $185 to $187 dressed. It was the third week in a row there was trade in the Fed Cattle Exchange auction. One lot of heifers, 97 head, sold in Kansas at $119/cwt. which is steady with last week's Kansas cash price. Net beef sales of 10,300 MT reported for 2018 were up noticeably from the previous week and up 19 percent from the prior four-week average. The latest USDA steer carcass weights were down 3 pounds from last week, making them 4 pounds lower than last year. October beef exports totaled 117,838 MT. That's up 6 percent from a year ago and valued at $727.4 million dollars. It's also the second-highest monthly total on record.
Strategy and outlook
Producers can manage risk by using the options market ahead of a sharp negative seasonal bias.
Lean hogs closed the week $3.02 lower. Weekly hog weights came in at 284.0 pounds vs. 284.5 pounds last week and 286.1 pounds a year ago. Net sales of 22,300 MT reported for 2018 were up 12 percent from the previous week and 18 percent from the prior four-week average. October pork exports set a new monthly record. October pork export volume was 207,725 MT. That's the largest since May. Since January, pork exports are 1 percent above last year's record pace at 2.02 MMT. The value was also up 1 percent to $5.33 billion.
Strategy and outlook
Hedge rallies in the deferred contacts as the market prices in better export forecasts for 2019.
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 email@example.com. Hoops can be contacted at 417-501-5132. (Copyright 2018 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.