Starting off the fourth quarter of 2013, North American ag equipment dealers reported year-over-year sales grew 4 percent on average.
But considering declining corn prices and the uncertainties surrounding equipment depreciation, they’re looking for only 1 percent growth in revenue for 2014, according to the latest “Dealer Sentiments & Business Conditions Update” survey results, reports Farm Equipment magazine.
While used equipment inventories remain higher than North American farm equipment dealers would like, used tractor prices have held up fairly well.
The same can’t be said for used combine pricing.
According to the survey, a net 21 percent of dealers said their used inventory levels were “too high” (37 percent too high; 47 percent about right; 16 percent too low), down slightly from 26 percent in the previous month.
In terms of pricing, tractors over 100 horsepower were up 1.8 percent year-over-year on average, following an increase of 1.3 percent reported the previous month.
Prices for used tractors under 100 horsepower were also up 1.5 percent, which was down from 2.3 percent during the prior month.
Compared to a year earlier, used combine values fell 3.4 percent in October compared to a decline of 3.2 percent in the month prior.
Corn closed the week $.09 1/4 higher. Last week, private exporters reported corn sales of 111,000 metric tons to Mexico and 180,000 mt of corn sold to an unknown destination.
Weekly export sales of corn showed a total of only 6.1 million bushels, below the 11 mb needed each week to reach the USDA forecast.
Total annual exports total of 1.128 billion bushles represent 78 percent of the USDA’s export of 1.450 bb.
In the monthly supply/demand report, the USDA forecast corn for grain production is estimated at a record 13.9 bb, down slightly from the Nov. 1 forecast, but 29 percent above 2012.
The average yield in the United States is estimated at 158.8 bushels per acre. This is down 1.6 bpa from the November 2013 forecast, but 35.4 bpa above the
2012 average yield of 123.4.
Area harvested for grain is estimated at 87.7 million acres, up slightly from both the November forecast and 2012.
First quarter feed use at just over 2.4 mb is a record for the first quarter, just eclipsing the first quarter of 2007/08.
The USDA raised its full year feed usage by 100 mb to 5.3 bb.
The USDA’s final ending stocks projection declined to 1.63 bb, down from from 1.79 bb.
With supply now finalized and indications of improved demand, this report should mark the low for prices and a shift in sentiment even though the supplies remain ample.
Strategy and outlook: Producers are 100 percent sold of 2013/14 crop. Producers are 10 percent sold of the 2014/15 crop.
Soybeans closed the week 7.25 cents higher from last week. Last week, private exporters reported a total of 791,000 mt of soybeans sold to China.
Weekly export sales of soybeans showed a total of only 5.7 mb, easily a marketing year low.
Exports should improve next week with strong private sales reflected in the total.
Total export sales of 1.499 bb exceed the USDA forecast of 1.475 bb. In the monthly supply/demand report, the USDA said soybean production in 2013 totaled 3.29 bb, up 1 percent from the Nov. 1, 2013 forecast and up 8 percent from 2012. United States production is the third largest on record.
The average yield per acre is estimated at 43.3 bpa, 0.3 bushel above the Nov. 1 forecast and 3.5 bpa above last year’s yield.
Harvested area is down slightly from 2012 to 75.9 million acres and is the fourth highest on record.
The production increase was swallowed up by increased usage, allocated between crush and exports.
Brazil’s production was raised to 89 million metric tons although exports were left unchanged.
Argentina’s production was unchanged at 54.5 mmt.
U.S. ending stocks were left unchanged at 150 mb, a historically tight number.
Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop.
Producers are 10 percent sold of 2014/15 production. Sell 10 percent at $12.10.
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.
Brian Hoops can be reached at (605) 660-1155.
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