Corn closed the week one-half cent lower.
U.S. corn exports, for the week ending Jan. 17, 2019, were solid at 43.6 MB, notably above last year's same-week exports of 28.5 MB and were the highest in eight weeks. Despite all of the strong comparisons to recent weeks and last year, this week's exports were still below the roughly 46 MB/week in which they will need to average over the coming seven-plus-month period in order to reach the USDA's 2018-19 2.450 BB export projection.
In the weekly Energy Information Administration report, U.S. ethanol production, for the week ending Jan. 18, 2019, ticked back lower, after a one-week recovery, to 1.031 million barrels/day (303 million gallons/week) from 1.051 mbpd (309 mil gal/week) the week prior and dropping back to 2.9 percent below last year's same-week production of 1.062 mbpd after the previous two weeks saw production down 0.9 percent and up 0.4 percent from year ago levels. Crude oil stocks saw a buildup of 8.0 million barrels vs. an expected decrease of 800,000 barrels.
The average estimates of U.S. corn carryout for the January supply/demand report are pegged at 1.694 BB, down from December at 1.781 BB. The world corn carryout ranges from 305.50-310.00 MMT compared to December at 308.80 MMT. Last month’s report showed corn yield at 178.9 bushels/acre on 81.8 million harvested acres.
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.
For the week ending Jan. 25, Chicago wheat closed 4.25 cents higher, Kansas City wheat closed 3.5 cents higher, and Minneapolis wheat was half a penny higher.
U.S. wheat exports last week – of 19.0 million bushels – were modestly above last year's same-week exports of 15.6 MB. With cumulative exports of 515 MB being down 10 percent from last year's 574 MB at this time, the USDA's 1-billion-bushel export projection continues to look optimistic as it would require exports to average roughly 23.4 MB/week over the last 19 weeks of the 2018-19 marketing year. This level has only been reached once in the 33 weeks so far this year. Japan bought 53,100 metric tons U.S. wheat, 24,300 MT Canadian wheat and 24,600 MT of Australian wheat in their weekly tender. Taiwan is tendering for 55,000 MT of U.S. milling wheat.
According to R.J. O'Brien, Russian 11 percent protein wheat is priced around $15/ton below U.S. soft red winter; Russia enjoys an $8-$10 freight advantage over the U.S., as well. The estimated U.S. wheat carryout for the January report is at 987 MB, up from the December value of 974 MB. The world wheat carryout average estimates are at 268.22 million metric tons. Last month’s report showed wheat yield at 58.6 bushels/acre on 39.6 million harvested acres. U.S. winter wheat 2019-20 seedings are estimated between 31.513 to 33.3000 million acres. Hard red winter, soft red winter and white winter wheat are estimated at 22.727, 6.019 and 3.486 million acres respectively for 2019-20 seedings.
Strategy & outlook
The huge supplies of wheat mandates producers sell out inventory and use options to manage risks on sharp rally attempts.
Soybeans closed the week ending Jan. 25 at 8.5 cents higher.
U.S. soybean exports saw another relatively strong week with 40.8 MB shipped and continued the rebound from the depressed levels seen over the prior three-week period of 24.5-27.8 MB. However, cumulative exports of 717 MB are still down 40 percent from last year's 1.186 BB at this time. Soybean exports will need to average nearly 35 MB/week through the end of August in order to reach the USDA's 1.900 BB annual export projection.
Brazil soybean harvest advanced to 5 percent complete while the first corn harvest is 4 percent complete. Michael Cordonnier lowered the Brazil soybean production by 1 MMT to 115 MMT (4.225 BB) (USDA 122 MMT). He left the Argentina soybean estimate unchanged at 56 MMT.
The projected U.S. soybean carryout for the January report is estimated at 904 MB, down from last month’s release of 955 MB. The world soybean carryout is estimated from 111.80-117.00 MMT. Last month’s report showed soybean yield at 52.1 bushels/acre on 88.3 million harvested acres.
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 & FEEDER CATTLE
Last week, live cattle closed 62 cents lower while feeder cattle closed 85 cents higher. Fed cattle trade developed with live trade at mostly $123, $1 lower than last week, dressed deals were at mostly $197, steady with the previous week.
Feeder cattle traded mixed, from $4 lower to $4 higher on the week. The Fed Cattle Exchange online auction was held and of the 4,139 head offered, one lot from Texas sold at $123/cwt. and one lot in Kansas was passed on at $123. The rest were offered at $124-$125 and were passed.
Weekly steer weights were not released due to the temporary government shutdown. It is expected with the wintery weather, cattle weights will decrease compared to a year ago. Fat cattle should trade in a range of $125-$126 up to $130-$131 this spring.
Strategy & outlook
Producers can manage risk by using the options market.
Lean hogs closed the week of Jan. 25 at $4.32 lower. Weekly hog weights were up slightly to 285.9 pounds from 285.8 pounds the week prior but remain above last year's 284.9 pounds. With the commercial accounts presumably showing a heavy bearish slant, producers should hedge rally attempts.
Strategy & outlook
Producers should have hedged on rallies in the deferred contacts.
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 email@example.com. Hoops can be contacted at 417-501-5132. (Copyright 2019 Midwest Market Solutions Inc.)
This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.