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Market Forecaster: Winter wheat condition rating drops

Market Forecaster: Winter wheat condition rating drops

Corn closed the week 7 ¼ cents higher. Private exporters announced sales of 302,160 metric tons (mts) to Mexico and 334,000 mts to an unknown destination.

U.S. corn exports were 32.8 million bushels. Cumulative corn export inspections of 364 million bushels are up 65% from last year’s 221 million, having averaged 32.3 million bushels per week so far. In order to reach the USDA's 2.65 billion bushel export projection, as they will need to average roughly 53 million bushels per week over the next 40 weeks. That compares to last year's 35.2 million per week average from this point forward.

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

In the weekly Energy Information Administration report, U.S. ethanol production rose to a 35-week high of 990,000 barrels per day versus 962,000 barrels last week and 1,059,000 last year. Ethanol stocks rose to an eight-week high to 20.9 million barrels from 20.2 million the week prior and is up from the same week last year 20.3 mb.

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 11 ½ cents higher. Private exporters did not announce any sales.

In the weekly export inspections report, data showed 73.9 million bushels shipped in the week ended Nov. 19, which slightly exceeded last year's marketing year high weekly exports this week of 71.7 million bushels. Cumulative export inspections of 897 million bushels are up 70% from last year’s 529 million, leaving weekly shipments needing to average roughly 30.3 million bushels per week through the end of August in order to reach the USDA’s 2.2 billion bushel export projection.

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

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 U.S. values.

WHEAT

Chicago and Kansas City wheat closed 7 ¾ cents higher and Minneapolis wheat 9 cents higher. Private exporters did not announce any export sales.

U.S. wheat exports were modest at 13.2 million bushels and the fifth of the last six weeks’ exports to fall below year ago levels. Accordingly, cumulative export inspections of 456 million bushels are now back to nearly unchanged from last year's 454 million after being up more than 10% year-over-year only eight weeks earlier. In order to reach the USDA’s 975 million bushel export projection, wheat exports will need to average roughly 17.4 million bushels per week verses last year’s 17.1 million per week average through the end of May.

In the USDA weekly crop progress and conditions report, winter wheat rating dropped 3% to 43% good or excellent from 46% last week and average of 54%. This is the second lowest rated crop since 1988, trailing only 2012. In 2012, winter wheat was only rated 33% good or excellent. Next week’s conditions will be the final conditions report until spring.

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 & FEEDER CATTLE

Last week, live cattle closed $2.35 higher while feeder cattle closed $4.97 higher.

Light to moderate fed cattle cash trade occurred in the North at mostly $110 to $111 per hundredweight live and $172 to $174 dressed – steady to $2 higher. Trade in the South was noted at primarily $111 per hundredweight – $1 higher than last week.

Last week, the fed cattle exchange saw three loads of Texas cattle sell at $110.75 to $111.

The latest USDA steer carcass weights were up 6 pounds from the prior week at 930, making them 24 pounds above last year.

Last week's beef export sales saw a net sales reductions of 15,500 metric tons, a marketing year low with shipments of 20,200 tons 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

Lean hogs closed the week $2.07 higher

Iowa and southern Minnesota weekly hog weights for week ending Nov. 21 were down slightly to 288.7 pounds from 289.1 pounds last week and 287.1 pounds a year ago.

Last week’s net pork sales of 18,800 metric tons with shipments at 40,900.

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.

The Tri-State Neighbor Weekly Update

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