For the week ending Nov. 30, Chicago wheat closed 9 cents higher; Kansas City wheat closed 14 cents higher and Minneapolis wheat 4.5 cents higher. Last week, private exporters announced a sale of 120,000 metric tons of U.S. soft red winter (SRW) to Egypt.
Weekly export sales in late November were just 13.9 million bushels and were below the roughly 17.3 MB/week in which sales need to average in order for the USDA's 1.025 billion bushel export projection to be met. Total commitments of 547 MB remain down 13 percent from last year's 631 MB, while USDA is projecting a nearly 14 percent increase in exports this year.
In the weekly crop progress and conditions report, U.S. winter wheat seeding is now 95 percent complete vs. 96 percent expected, 93 percent last week, 99 percent last year and 99 percent average. U.S. winter wheat conditions declined to 55 percent good to excellent vs. 56 percent expected, 56 percent last week and 50 percent last year.
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. Soft red winter have found a price level that will stimulate demand but hard red winter is still searching for that value.
Strategy & 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 Nov. 30, at 5.5 cents higher.
Last week, private exporters did not announce any sales.
In the weekly export sales report; U.S. corn sales, for the week ended Nov. 22, 2018, were reported at 49.9 MB, coming in solidly above market expectations and up from the previous week's 34.4 MB, as well as above last year's same-week sales of 23.6 million and were the largest in eight weeks.
In the weekly crop progress & conditions report; U.S. corn harvest is now 94 percent complete vs. 95 percent expected, 90 percent last week, 94 percent last year and 96 percent average.
In the weekly Energy Information Administration report, crude oil stocks were estimated at 450.5 MB, an increase of 3.6 MB vs 1.0 MB increase expected. Gasoline stocks declined 0.8 million barrels vs. an expected increase of 1.0 million barrels. Ethanol production averaged 1,048k bpd vs. 1,042k the prior week.
Demand needs to improve for corn to have any chance of a meaningful rally. The U.S. window for opportunity to export corn ends in the spring with a larger Ukraine and South America corn crop competing for world market share.
Strategy & 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 on Nov. 30 at 12.5 cents higher. Last week, private exporters announced sales totaling 388,748 MT of beans to an unknown destination.
In the weekly export sales report, U.S. soybean sales were 23.1 MB, right in the middle of market expectations and down slightly from the previous week's 25.0 MB and were, once again, solidly below the same-week year ago sales of 34.6 MB. Soybean sales last year over the next three weeks averaged 63.8 MB/week. Soybean total commitments of 855 MB remain down 32 percent from last year's 1.262 BB and sales will need to average roughly 27.1 MB/week in order to meet the USDA's 1.900 BB export projection.
In the weekly crop progress and conditions report, U.S. soybean harvest is also 94 percent complete vs. 96 percent expected, 91 percent last week, 99 percent last year and 98 percent average.
Strategy & 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 62 cents lower while feeder cattle closed $4.10 lower. Last week, Fed cattle trade had a firm undertone with prices steady to $1 higher. Prices the previous week were mostly $116 to $117 live and $180 to $185 dressed. The Fed Cattle Exchange saw 620 head listed for sale with seven lots. One lot in Kansas of 148 head sold at $116.75 while the five Nebraska lots asked $116 and went unsold and the other lot from Kansas asked $117 and went unsold. Net beef sales of 9,100 MT reported for 2018 were down 26 percent from the previous week and 42 percent from the prior four-week average. Weekly steer weights fell 4 pounds to 900 pounds from 904 the week prior and a 2 pounds less than a year ago of 902 pounds. This is well below 2015 weights of 925 pounds.
Strategy & outlook
Producers can manage risk by using the options market ahead of a sharp negative seasonal bias.
Lean hogs closed the week 60 cents lower. Weekly hog weights rose slightly to 283.9 pounds vs. 283.4 pounds the week prior vs. 285.8 pounds last year. Net sales of 20,900 MT reported for 2018 were up 44 percent from the previous week and 7 percent from the prior four-week average.
Strategy & 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 firstname.lastname@example.org. Hoops can be contacted at 417-501-5132. (Copyright 2018 Midwest Market Solutions Inc.)
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