Corn closed the week 36 1/4 cents lower. Last week, private exporters did not report any export sales.
In the weekly export inspections report, U.S. corn exports, for the week ended Aug. 8 were 27.7 million bushels and were up slightly from the previous week's 25.4 mb. Exports exceeded the roughly 19 million bushels/week needed to average over the final three full weeks of the 2018-19 marketing year in order to reach the USDA's 2.100 billion bushel export projection.
The long awaited August WASDE report saw a bearish blow to grain bulls with an increase in production, the opposite of what the trade was expecting for corn. The USDA pegged the 2019 corn harvested acres at 82.0 million, yield at 169.5, up 3.5 bpa from last month, resulting total production at 13.901 billion bushels. This production is down from last year when the U.S. produced a 14.42 bb crop on a yield of 176.4 bpa.
Carryout was expected to be slashed for 2019-20 to 1.613 bb, but was actually increased to 2.181 bb vs. 2.010 bb in July. Carryout for 2018-19 was increased to 2.360 bb vs. 2.340 bb in July.
Exports for 2019-20 were lowered by 100 mb and ethanol demand by 25 mb. The corn condition report showed the good/excellent (G/EX) as of Aug. 11 was unchanged at 57 percent and compared to 70 percent last year. Traders were looking for a 1 percent-2 percent drop in yesterday's crop conditions.
The corn crop is 90 percent silking compared to 96 percent last year and 39 percent of the crop is in dough stage compared to 71 percent last year. Of the top 18 states, five reported better, 10 worse, and three unchanged G/EX ratings. Major producing states with improving conditions were Nebraska 75 percent (+4 percent), Missouri 39 percent (+5 percent). Declining conditions in major producing states were Iowa 65 percent (-1 percent), Illinois 40 percent (-1 percent), Minnesota 56 percent (-1 percent), Indiana 33 percent (-3 percent), South Dakota 64 percent (- 2 percent), Wisconsin 63 percent (-2 percent), and North Dakota 71 percent (-2 percent).
STRATEGY & OUTLOOK
Producers should use more option strategies this year than in previous years to provide greater marketing flexibility.
Soybeans closed the week 14 cents lower. Last week, private exporters announced sale of 296,500 mts of soybeans to an unknown destination for 2019-20.
In the weekly export inspections report, U.S. soybean exports last week were 34.7 million bushels and were just slightly below the previous week's 38.0 mil bu. Soybean exports continue at a pace supporting the USDA's 1.700 billion bushel export projection.
In the weekly crop conditions report, soybean crop conditions showed the good/excellent (G/EX) rating as of Aug. 11 was unchanged at 54 percent and compared to 66 percent last year. Improving conditions in top producing states were Nebraska 73 percent (+3 percent), Kansas 50 percent (+1 percent), Arkansas 59 percent (+6 percent). Declining conditions in major producing states were Illinois 39 percent (-1 percent), Iowa 63 percent (-2 percent), Minnesota 59 percent (-2 percent), North Dakota 62 percent (-1 percent), Indiana 34 percent (-2 percent), South Dakota 53 percent (-1 percent), Wisconsin 66 percent (-3 percent).
In the WASDE supply/demand report, the USDA pegged the 2019-20 bean harvest acres at 75.9 million, yield at 48.5, unchanged with last month and total production at 3.68 billion bushels vs. 3.845 bb last month. This acreage total was down a shocking 12.5 million acres from 2018.
Despite the sharp drop in planted acres, carryout is projected to be the second largest on record. Carryout for 2019-20 was reduced to 755 mb vs. 795 mb in July. Carryout for 2018-19 was increased to 1.070 bb vs. 1.050 bb in July. The exports were lowered by 100 mb for the 2019-20 marketing year while crush was left unchanged.
The NOPA crush report for July reported 168.093 mb crushed with meal exports at 879 tons and soyoil stocks at 1.467 billion pounds. The crush was well above trade expectations at 155.826 mb and the oil stocks were well below trade expectations of 1.530 billion pounds. July crush rebounded significantly from 148.8 million in June and actually represented a new all-time crush for the month of July, marginally surpassing last year's 167.7 million.
STRATEGY & OUTLOOK
Large carryover stocks gives the market some cushion in case of lower yields but August is the most important month for soybean production.
For the week, Chicago wheat closed 29 cents lower, Kansas City wheat closed 24 1/2 cents lower and Minneapolis wheat 13 1/4 cents lower. Last week, Egypt bought 295,000 mts of Russian and Ukrainian wheat.
In the weekly export inspections report, U.S. wheat exports last week were the second highest of the 2019-20 marketing year so far at 25.3 million bushels, up from the previous week's 15.3 mil bu and last year's same-week exports of 17.9 mil bu. Cumulative exports, through 10 weeks of the marketing year, of 181 million bushels compare to 142 million at this time. Wheat exports will need to average roughly 18 million bushels/week in order for the USDA's 950 million bushel annual projection to be met, exactly in line with the 18.1 million bushel/week average experienced so far.
Spring wheat rated good/excellent (G/EX) as of Aug. 11 came in at 69 percent vs. 73 percent last week and compared to 75 percent last year. Of the top six states, two reported better, four worse, and 0 unchanged G/EX ratings. Declining conditions were seen in North Dakota 71 percent (-4 percent), Montana 61 percent (-8 percent), Minnesota 83 percent (-1 percent), and South Dakota 62 percent (-5 percent). Spring wheat harvested as of Aug. 11 was at 8 percent.
Winter wheat harvested as of Aug. 11 was seen at 89 percent. The USDA increased wheat production by 1.6 bpa to 51.6 bpa. Export demand was increased by 25 mb to 975 mb, certainly justified by the strong start to the marketing year. This resulted in the USDA raising the 2019-20 carryout to 1.014 bb from 1.000 bb last month. 2019-20 HRW carryout was increased by 26 million bushels to 452 mb and spring wheat stocks were reduced 1 million bushels to 322 mb.
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
Last week, live cattle closed $8.95 lower while feeder cattle closed $6.27 lower due to the fire at the Tyson kill facility in Kansas.
Last week, fed cattle trade occurred in the North at mostly $106 live and $172 dressed — $7 to $8 lower than last week. Trade in the South was primarily $105 — $5 lower vs. last week. Boxed beef traded $18 to $19 higher on the week as the threat of limited supplies before Labor Day pushed the market. Feeder cattle traded $4 to $10 lower compared to last week. The Fed Cattle Exchange online auction saw three of the four lots offered for sale sold at $105.
The latest USDA steer carcass weights were up 3 pounds versus the prior week at 872, making them 8 pounds less than last year. Net beef sales of 16,200 MT were down 27 percent from the previous week, but up 3 percent from the prior four-week average.
STRATEGY & OUTLOOK
Producers should have transferred all risk to the cash markets. Summer lows have been established and a sizeable rally should unfold.
Lean hogs closed the week $4.87 lower.
Iowa/S. Minnesota weekly hog weights came in at 276.8 lbs. vs. 276.4 lbs. the previous week and 277.2 lbs. last year. Net pork sales of 20,400 MT reported for 2019 were up 48 percent from the previous and 25 percent from the prior four-week average. China bought net 10,200 MT of U.S. pork in the week ending Aug. 8, while taking shipment of 6,800 MT.
STRATEGY & OUTLOOK
Producers should have moved 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.
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