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Markets: Commodities get close to yearly projections

Markets: Commodities get close to yearly projections

CORN------

Corn closed the week 13 ½ cents higher. Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. corn exports last week were 30 million bushels (mb) and were the second-lowest of the last six weeks. However, exports over this period averaged 33.8 mb per week, still solidly better than last year's 21.6 million per week during the same period, with cumulative export inspections of 501 mb up 67% from last year's 301 million at this time. 

Corn exports will need to average roughly 55 mb per week over the remainder of the marketing year in order to reach the USDA's 2.650 billion bushel (bb) projection, which would be a record pace from this point forward and compare to last year's 36.8 mb per week.

In the weekly Energy Information Administration report, U.S. ethanol production rose to 976,000 bpd versus 957,000 bpd the prior week while ethanol stocks rose to 23.2 mb, a seven month high versus 22.9 mb last week and 21.5 mb last year.

Strategy and outlook: As we enter into the key growing period of South American production, producers should maintain their re-ownership of sold inventory with futures and options.

SOYBEANS------

Soybeans closed the week 43 ¾ cents higher. Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. soybean exports were 93.1 mb. This week's exports featured roughly 1.5 million metric tons (MMT) shipped to China and would reduce their outstanding (unshipped) sales on the books to roughly 6.4 MMT based on last week's Export Sales data. Cumulative export inspections of 1.275 bb are up 75% from last year's 727 mb, leaving exports needing to average roughly 23.3 mb per week through the end of August in order to reach the USDA's 2.2 bb export projection versus last year's 23.9 million per week average from this point forward.

Strategy and outlook: Producers should have sold soybeans off the combine as there is no carry and the market told you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. The key part of the South American growing season is directly ahead of the U.S.

WHEAT-------

For the week, Chicago wheat closed 19 ¾ cents higher, Kansas City wheat closed 20 ¾ cents higher and Minneapolis wheat 11 ½ cents higher. Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. wheat exports last week of 14.4 mb were right in line with average exports over the last seven weeks of 14.3 mb per week. However, with last year's exports this week of 22.3 mb, cumulative export inspections of 519 mb slipped back below last year's 522 million for the first year-over-year deficit since early July. Wheat exports will need to average roughly 18.1 mb per week versus last year's 17 million per week in order to reach the USDA's 985 mb annual projection, which we do not see as an issue at this time.

Strategy and outlook: Large supplies of wheat in Russia, Australia and Canada will force these countries to export supplies to the world. Producers should not be carrying unprotected product.

LIVE CATTLE-----

Last week, live cattle closed 17 cents higher while feeder cattle closed 12 cents higher.

Last week, light to moderate fed cattle cash trade was noted in the North at primarily $172 per hundredweight dressed - $4 to $7 higher than last week. Active trade occurred in the South at mostly $110 per hundredweight – $2 higher than last week.

Last week, the Fed Cattle Exchange had 803 head offered for sale with 545 head sold at an average of $110, $2 higher than previous sales. 

The latest USDA steer carcass weights were unchanged compared to the prior week at 922, making them 10 pounds above last year.

Last week's beef export sales saw a net sales of 6,000 metric tons (mts) with shipments of 13,500 mts reported.

Strategy and outlook: Supplies of cattle are expected to increase in January and extend until April. These supplies are expected to cap rallies during the winter months and exportable demand is needed to keep values from declining from current levels. Producers should have window or fence strategies to protect the downside but allow for upside potential. 

HOGS----

Lean hogs closed the week $1.05 higher.

The quarterly hog and pig report saw all hogs and pigs at 99.1% versus est of 99%, kept for breeding at 97% versus est of 98.1% and kept for marketing at 99.3% versus est of 99%.

Iowa/S. Minnesota weekly hog weights for week ending December 19 saw weights fall to 288.7 pounds versus 290.4 pounds last week and 285.9 pounds a year ago.

Last week's net pork sales of 16,300 mts with shipments at 40,500 mts. 

Strategy and outlook: Strong exports of US pork and higher product values have rallied futures off their lows. As the market rallies into resistance, producers should at a minimum, use a put/call spread to lock in profits.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. The home office is in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb.

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