Corn closed the week 15 cents lower. Private exporters announced sales of 182,050 metric tons (mts) of corn to Mexico and 344,000 mts of corn to an unknown destination.
In the weekly export inspections report, U.S. corn exports last week were 35 million bushels (mb) and significantly above last year's same-week exports of 17.3 mb. Cumulative export inspections of 399 mb are up 68% from last year's 238 million, leaving weekly shipments needing to average an estimated very strong 53 mb per week through the end of August versus last year's 35.6 million per week average from this point forward and record average weekly exports during Dec-Aug of 50.3 mb per week in 2017/18.
In the weekly Energy Information Administration report, US ethanol production fell to 974,000 barrels per day (bpd) versus 990,000 bpd the prior week and 1,060,000 bpd a year ago. U.S. ethanol stocks rose to a 24 week high at 21.2 mb versus 20.9 mb last week and 20.6 mb last year.
Strategy and outlook: Technicals just turned bearish with an outside weekly reversal charted. If there is follow through on this reversal, a larger correction could develop. Producers should have sold product and re-owned with futures and options.
Soybeans closed the week 31 ¾ cents lower. Private exporters did not announce any export sales.
In the weekly export inspections report, U.S. soybean exports, for the week ended 11/26/20, were 74.8 mb were well above last year's same-week exports of 57.9 mb. Cumulative export inspections of 980 mb are up 67% from last year's 587 million and remain record high through the first quarter of 2020/21, surpassing the previous record of 959 mb through 13 weeks in 2016/17. In order to reach the USDA's 2.2 billion bushel export projection, soybean exports will need to average roughly 29.0 mb per week over the remainder of the marketing year versus last year's 25.6 million per week.
USDA reported U.S. soybean crush in October was 196.6 mb, exactly in line with average market expectations, up significantly in seasonal fashion from September crush of 171.1 mb and 5.0% above last year's Oct. crush of 187.2 mb. Moreover, Oct. crush set a new all-time monthly record in surpassing March 2020's 192.2 mb. USDA reported 2.282 billion pounds of soybean oil was produced in October versus 1.968 billion in September and 2.150 billion pounds last year and USDA reported end October U.S. soybean oil stocks were 1.964 billion pounds, up solidly from 1.849 billion in September, notably above last year's 1.821 billion pounds and were the second-highest Oct. stocks of the last 8 years.
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 also re-owned production using futures and options in deferred contracts. Dry weather in parts of Argentina is bullish for US values.
For the week, Chicago wheat closed 30 ¼ cents lower, Kansas City wheat closed 24 ¼ cents lower and Minneapolis wheat 19 ½ cents lower. Egypt bought 170,000 mts of Russian and Ukrainian wheat.
In the weekly export inspections report, U.S. wheat exports last week were 18.5 mb and were a seven-week high. Last week's exports broke the six-week string of falling below the average "needed" export pace of 17.4 mb per week, having averaged only 12 mb per week during the period. Cumulative export inspections of 474 mb are up a mere 1% from last year's 466 million, keeping pace with the USDA's 975 mb annual export projection also reflecting an estimated 1% increase year over year.
In the USDA weekly crop progress and conditions report, winter wheat conditions improved 3% to 46% good or excellent in the final crop conditions report of the fall by the USDA. Some states will update conditions monthly, but the USDA will not update their conditions until the first week of April.
Stats Canada issued its final crop production estimate for the year. All wheat crop is estimated at 35.183 million metric tons (mmts) versus 34.145 mmts in October, which is the second-largest on record trailing only 2013/14 crop year of 37.6 mmts.
ABARE raised their estimate of the Australian wheat crop to 31.2 mmts from their September estimate of 28.9 mmts versus 28.5 mmts estimated by the USDA. This would be more than double last year’s 15.2 mmts crop.
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.
Last week, live cattle closed 95 cents lower while feeder cattle closed 12 cents lower.
Last week, moderate fed cattle cash trade in the North occurred at mostly $110 live and $172 to $174 dressed – steady to $1 lower. Moderate volumes in the South traded at primarily $110, with a few up to $112 – mainly $1 softer than the prior week.
This week, the Fed Cattle Exchange had 1,025 head listed for sale. 488 head of heifers from Texas were sold at $110.50 - $110.75 with the rest of the inventory unsold.
The latest USDA steer carcass weights were down 7 pounds from the prior week at 923, making them 12 pounds above last year.
Last week's beef export sales saw a net sales of 13,700 mts with shipments of 16,600 mts reported.
Strategy and outlook: Supplies of cattle are expected to increase in December 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.
Lean hogs closed the week $1.00 lower
Iowa/S. Minnesota weekly hog weights for week ending Nov. 28 saw weights increase to 290.7 pounds from 288.7 pounds last week and 287.0 pounds a year ago.
Last week's net pork sales of 31,300 mts with shipments at 34,100 mts.
In the monthly cold storage report, total red meat supplies in freezers were up 1% from the previous month but down 12% from last year. Total pounds of beef in freezers were up 8% from the previous month and up 7% from last year. Frozen pork supplies were down 4% from the previous month and down 27% from last year. Stocks of pork bellies were down 21% from last month and down 57% from last year.
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.