Corn closed the week 13 ¼ cents higher. Private exporters did not announce any private sales.
In the weekly export inspections report, U.S. corn exports were only 18.4 million bushels (mb) and continue to run sharply below year ago exports. Through the first five weeks of 2019/20, cumulative exports are just 80 mb, 66% below last year's 233 mb at this time, averaging 17 mb per week versus last year's 47.3 million per week average through early October. Based on the USDA's 2.050 billion bushel export projection, corn exports will need to average roughly 39 mb per week over the marketing year versus last year's 34.5 million per week average from this point forward.
In the weekly crop progress and conditions report, U.S. corn conditions were 56% good or excellent versus 57% expected, down 1% from 57% last week and well below 68% last year. U.S. corn harvest is only 15% complete versus 19% expected, 11% last week, 33% last year and 27% average.
In the monthly supply and demand report, the trade was expecting a bullish report but instead was stymied by a neutral production figure and negative demand news. Corn's lone bullish possibility is production and with the USDA increasing yields, that was enough to hurt priced. The report raised yields from 168.2 bushels per acre (bpa) to 168.4 bpa but slightly lower harvested acres of 81.8 million led to a lower production of 13.779 billion bushels (bb) versus 13.799 bb last month. The trade was looking for a signficant cut of 1.4 bpa and lower production of 13.591 bb. Ending stocks came in at 1.929 bb, down from 2.190 bb last month but well above the average estimate of 1.689 bb by the trade prior to the report.
From a demand perspective, while feed and residual were raised by 125 mb, ethanol was lowered 50 mb and exports were lowered 150 mb to account for the changes in the ending stocks.
Strategy and outlook: Look to sell inventory at resistance and retracement levels.
Soybeans closed the week 18 ¼ cents higher. Private exporters announced sales totaling 836,000 metric tons (mts) of soybeans to China.
In the weekly export inspections report, U.S. soybean exports were 38.2 mb and were little-changed from the previous week's 36.2 mb, but were well above last year's same-week exports of 22.4 mb. Cumulative exports of 154 mb are up 17% from last year's 132 million at this time, leaving exports needing to average roughly 33.4 mb per week in order to reach the USDA's 1.775 billion bushel export projection.
U.S. soybean conditions are 53% good or excellent versus 55% expected, down 2% from 55% last week and well below 68% last year. This is the lowest conditions of the year. U.S. soybean harvest is only 14% complete versus 15% expected, 7% last week, 31% last year and 34% average.
In the monthly supply and demand report, the USDA showed a slight reduction in planted/harvested acres from 75.9 to 75.6 million and a 1 bushel drop in yield from 47.9 bpa to 46.9 bpa. This lowered overall production to 3.55 bb from 3.633 bb last month.
From a demand perspective, crush was raised 5 mb and exports were left unchanged. This lowered the carryout to 460 mb from 640 mb last month. This would still be the second largest carryout in history but a far cry from the 1 billion plus bushels that were thought possible earlier this spring. Commercials continue to sell into the market, major resistance is at $9.95 on the weekly charts.
Strategy and outlook: The U.S. and China has reached a preliminary trade agreement. Use any strength from the agreement to make cash sales.
For the week, Chicago wheat closed 18 ¾ cents higher; Kansas City wheat closed 15 ½ cents higher and Minneapolis wheat 12 cents higher. Egypt bought 295,000 mts of Russian and Ukrainian wheat.
U.S. wheat exports of 14.2 mb were down from the previous week's 18.5 mb and modestly below last year's same-week exports of 16.5 mb. Through the first 18 weeks of the 2019/20 marketing year, cumulative exports of 327 mb are still up 21% from last year's 271 million. Wheat exports will need to run essentially unchanged from last year throughout October-May at 18.5 mb per week in order to reach the USDA's 975 mb export projection.
U.S spring wheat harvest is 91% complete versus 94% expected, 90% last week, 100% last year and 99% average. U.S. winter wheat seeding is 52% complete versus 54% expected, 39% last week, 55% last year and 53% average. In the monthly supply/demand report; the USDA made minimal changes to the wheat balance sheets, lowering harvested acres by 300,000 and exports by 25 mb. Feed usage was also lowered by 30 mb; resulting in an increase of 29 mb to ending stocks. This placed stocks at 1.043 bb, up from 1.014 bb last month and the 4th consecutive year of stocks above 1 billion.
Strategy and outlook: The huge world supplies of wheat mandates producers to sell out inventory and use options to manage risks on sharp rally attempts.
Last week, live cattle closed $1.05 higher while feeder cattle closed $3.00 higher. Fed cattle trade in the North was mostly $172 dressed, - $2 higher than the prior week on a dressed basis. Fed cattle trade occurred in the South at $109, $1 to $2 higher than the prior week.
This week, the Fed Cattle Exchange had 666 head cosigned for auction. All 4 lots; 2 from Kanas, 1 from Nebraska and 1 from Texas, went unsold. They asked between $108 and $109.
The latest USDA steer carcass weights were up 2 pounds compared to the prior week at 898, making them 2 pounds below last year. Net beef sales reductions of 29,100 metric tons (MT) reported for 2019 - a marketing-year low - were down noticeably from the previous week and from the prior four-week average.
Strategy and outlook: Markets are embarking on a counter seasonal rally.
Lean hogs closed the week $2.62 higher. China bought 18,800 MT.
Iowa and Minnesota weekly hog weights came in at 282.5 pounds versus. 281.9 pounds week prior and 280.9 pounds last year.
Net pork sales of 31,300 MT reported for 2019 were up 1% from the previous week and 26 percent from the prior four-week average. For 2020, net pork sales of 123,500 MT were reported for China (123,400 MT) and Australia (100 MT).
Strategy and outlook: Producers should have moved all risk to the cash markets.
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.