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Markets: Commodities rise as export projections are met

Markets: Commodities rise as export projections are met

CORN------

Corn closed the week 14 cents higher. Private exporters announced sales of 353,270 metric tons (mts) of corn to Mexico and 271,000 mts of corn to an unknown destination.

In the weekly export inspections report, corn inspections totaled 32.2 million bushels (mb) for the week ending Thursday, Nov. 12. Total inspections in 2020-21 are now at 331 mb, up 68% from the previous year versus the USDA estimate of corn exports at 2.650 billion bushels (bb) in 2020-21, up 49% from the previous year.

In the weekly crop progress and conditions report, U.S. corn crop harvest moved to 95% complete versus 96% expected, 91% last week, 73% last year, and 87% average.

In the weekly Energy Information Administration report, Ethanol production fell to 962,000 barrels per day (bpd) versus 977,000 bpa the prior week. This was well below last year's 1,033,000 bpd figure in 2019. Ethanol stocks remain unchanged at 20.2 mb versus 20.5 mb last year. Estimated corn usage for ethanol production fell to 99.1 mb versus 100.7 mb last week and 103.1 mb last year.

Strategy and outlook: Technicals are bullish and with smaller ending stocks and good demand, values are likely to work higher until South American production is assured. Producers should have sold product and re-owned with futures and options.

SOYBEANS------

Soybeans closed the week 33 ¾ cents higher. Private exporters did not announce any export sales.

In the weekly export inspections report, U.S. soybean inspections totaled 82.3 mb for the week ending Thursday, Nov. 12. Total inspections in 2020-21 are now at 815 mb, up 78% from the previous year versus the USDA estimate of soybean exports at 2.125 bb in 2020-21, up 26% from the previous year.

In the weekly crop progress and conditions report, U.S. soybean crop harvest advanced to 96% complete versus 96% expected, 92% last week, 89% last year, and 93% average.

The National Oilseed Processors Association soybean crush report for October set a new record at 185.245 mb, well above estimates of 177.1 mb, easily beating last month’s 161.5 mb and destroying the previous record of 175.4 mb. Bean oil stocks were close to expectations at 1.487 billion pounds versus 1.448 bp expected. Slightly higher than last month’s 1.433 bp and last year’s 1.423 bp.

Strategy and outlook: Producers should have sold soybeans off the combine as there is no carry and the market is telling you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. Dry weather in parts of Argentina is bullish for US values.

WHEAT-------

For the week, Chicago wheat closed unchanged, Kansas City wheat closed unchanged and Minneapolis wheat 8 ¾ cents lower. Private exporters did not announce any export sales.

In the weekly export inspections report, U.S. wheat inspections totaled 12 mb for the week ending Thursday, Nov. 12, 2020. Total wheat inspections in 2020-21 are now at 442 mb, up 1% from the previous year versus the USDA estimate of wheat exports at 975 mb in 2020-21, up 1% from the previous year.

In the USDA weekly crop progress and conditions report, U.S. winter wheat is now 96% seeded versus 97% expected. Winter wheat emergence stands at 85% versus 79% last week and 84% on average. U.S. winter wheat conditions improved 1% to 46% good or excellent versus 46% expected, 45% last week and 52% last year.

Strategy and outlook: Dryness is noted in parts of the Black Sea region and producers should reward supply rallies. Large supplies of wheat in Russia, Australia and Canada will force them to export supplies to the world.

LIVE CATTLE-----

Last week, live cattle closed $1.22 lower while feeder cattle closed $3.10 lower.

The monthly Cattle on Feed report was bullish compared to pre-report expectations. On feed supplies were slightly below estimates at 101.3% versus 101.7% estimated. The 11.973 million head will still be burdensome to the front-month contracts, while placements were 89% versus estimates of 91.1% and marketings in October at 99.9% versus estimates of 100.2% of a year ago.

Last week, fed cattle cash trade occurred at mostly $110 per hundredweight (/cwt) live and $172/cwt dressed, steady with the week prior.

Last week, the Fed Cattle Exchange had 930 head listed for sale. The first two lots were unsold, while the next three lots (543 head) went sold at $110.25, steady with the week prior.

The latest USDA steer carcass weights were down 2 pounds from the prior week at 924, making them 21 pounds above last year.

Last week's beef export sales were 46,400 metric tons (MT), a marketing year high with shipments of 22,300 mts reported, also a marketing-year high.

Strategy and outlook: Beef exports have improved exactly when the industry needed them too. Better export demand will offset large supplies of cattle that are hitting the market. Smaller supplies in the late first and second quarter of 2021 will be bullish for values. Producers should have window or fence strategies to protect the downside but allow for upside potential.

HOGS----

Lean hogs closed the week 50 cents higher

Iowa/S. Minnesota weekly hog weights for the week ending Nov., 14 jumped to 289.1 pounds versus 287.7 pounds last week and 287.7 pounds a year ago.

Last week's net pork sales of 28,900 mts with shipments at 38,800 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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