Corn closed the week 3 ¼ cents higher. Private exporters sales of 600,000 metric tons (mts) of corn to China and 130,000 mts of corn to an unknown destination.
In the weekly export inspections report, corn inspections totaled 40.8 million bushels (mb) for the week. Total inspections in 2019-20 are now at 1.587 billion bushels (bb), down 13% from the previous year. USDA is estimating corn exports at 1.795 bb in 2019-20, down 13% from the previous year.
In the weekly crop progress and conditions report, U.S. corn crop conditions fell 2% this week to 69% good or excellent versus 68% expected, 71% last week and 56% last year. Iowa saw the largest drop to 59% good or excellent, down 10% on the week. 76% of the crop is in the dough stage with 23% denting.
In the weekly Energy Information Administration report, ethanol production rose slightly compared to the prior week at 926,000 barrels per day (bpd) versus 918,000 bpd last week and 1,023,000 bpd last year. Ethanol inventory rose slightly to 20.3 mb versus 19.8 mb the prior week but still below last year's 23.4 mb.
Strategy and outlook: Producers should remain hedged, including multiple years of production. Downside risk remains amid increasing production and mounting supplies of corn.
Soybeans closed the week 5 ¾ cents higher. Private exporters announced sales totaling 592,000 mts of soybeans to China and 498,000 mts of soybeans to an unknown destination.
In the weekly export inspections report, soybean inspections totaled 28.8 mb. Total inspections in 2019-20 are now at 1.505 bb, down 6% from the previous year. USDA is estimating soybean exports at 1.650 bb in 2019- 20, down 6% from the previous year.
In the weekly crop progress and conditions report, U.S. soybean crop conditions dropped 2% to 72% good or excellent on the week, versus 72% expected, 74% last week and 53% last year. The soybean crop remains one of the highest rated in the last 30 years. Iowa saw a drop of 8% on the week, the largest of any state. 96% is blooming and 84% is setting pods.
The monthly National Oilseed Processors Administration crush report has crush at a new record for July crush at 172.794 versus estimates of 172 mb and well above last month’s 167.3 mb and last year’s 168.1 mb. July bean oil stocks were under estimates at 1.619 billion pounds versus 1.778 in June but well above last year’s 1.467 bps.
Strategy and outlook: Producers should have sold the latest rally or at a minimum, bought put options to lock in a minimum price level protection. Funds remain long the market due to strong demand trends. Record production looks to cap rallies despite strong exports.
For the week, Chicago wheat closed 24 ½ cents higher, Kansas City wheat closed 19 cents higher and Minneapolis wheat 17 ½ cents higher. Private exporters announced sale of 130,000 mts of HRW to an unknown destination.
In the weekly export inspections report, Wheat inspections totaled 17 mb. Total wheat inspections in 2020-21 are now at 207 mb, up 2% from the previous year. USDA is estimating wheat exports at 975 mb in 2020-21, down 1% from the previous year.
In the USDA weekly crop progress and conditions report, U.S. winter wheat harvest is virtually complete at 93% done versus 95% expected, 90% last week, 92% last year and 96% average. U.S. spring wheat harvest moved to 30% complete versus 30% expected, 15% last week, 14% last year and 43% average. U.S. spring wheat conditions are 70% good/excellent versus 68% expected, 69% last week and 70% last year.
Strategy and outlook: Values are rallying off contract lows and producers should reward any rallies. Supplies are increasing in Russia and harvested yields are coming in larger than expected. This demands US producers part with inventory as demand trends look to remain slow.
Last week, live cattle closed $1.07 lower while feeder cattle closed $2.20 lower.
The monthly Cattle On Feed report was bearish compared to trade expectations. On feed supplies came in at 101.5% of last year as feedlots reported 11,284,000 head in feedlots as of Aug. 1. This was above last year's 11,112,000 head and 11,093,000 in 2018. The placement figure of 111% was well above trade expectations of 105.9% and will pressure feeder cattle and the deferred contracts. Markets of 99.4% were slightly below pre-report estimates of 99.6%.
Last week, moderate to active fed cattle trade in the South occurred at $106 to $107 - mostly $2 higher than last week. Moderate trade in the North occurred at mostly $106 live and $169 dressed - steady to $1 higher than last week.
Last week, the Fed Cattle Exchange Auction listed a total of 1,462 head for sale. Only one pen of 150 feeders from Texas sold at $106.75 with the rest of the inventory unsold or PO'd.
The latest USDA steer carcass weights were up 1 pound from the prior week at 906, making them 28 pounds above last year.
Last week's net beef sales of 20,000 mts was reported for 2020 with shipments of 18,300 mts.
Strategy and outlook: Seasonal trends turn lower after the Labor Day holiday. Producers should employ hedging strategies that utilize options and futures as the increased supply and limited restaurant openings will force consumers to eat large supplies of beef at home.
Lean hogs closed the week $1.12 higher.
Iowa/S. Minnesota weekly hog weights down slightly for week ending Aug. 15 to 279.3 pounds from 280.4 pounds the week prior but heavier than the 277.2 pounds last year.
Last week's net pork sales of 20,600 mts with shipments at 30,800 mts.
Strategy and outlook: Strong exports of US pork should support the market, despite the excess amounts of supplies available to the market. If the market can mount a rally, 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.