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BRIAN HOOPS

By Staff | Apr 18, 2014

Cargill reported net earnings of $319 million in the fiscal 2014 third quarter which ended Feb. 28, down 28 percent from $445 million in the year-ago period.

Nine-month earnings were $1.45 billion, down 21 percent from $1.83 billion a year ago.

Third-quarter revenues were $32 billion, essentially even with the year-ago period.

Nine-month revenues totaled $98.7 billion.

“External events affected our quarterly results,” said David MacLennan, Cargill’s president and chief executive officer, “even as we saw operational improvements in

key businesses.

“Our animal protein results are much improved from last year, and, with 2012’s acquisition of Provimi, our global animal nutrition operations are on a record pace for the year.

“Despite on of the worst winters on record, we reliably delivered a near-record tonnage of road salt and deicing products to our customers across North America’s snow belt.”

MacLennan said the company’s earnings were trimmed by a trading loss related to an unprecedented price spike in U.S. power markets in late January, part of which has been recovered; the rejection of certain U.S. corn shipments to China; and weather-related disruptions to railway service in North America.

Monsanto

Monsanto finished its second quarter with earnings of $1.7 billion, up 13 percent from one year ago.

Total seed sales increased 7 percent.

Soybean seed and traits led the way with a 21 percent increase.

Corn seed and traits rose just over 4 percent.

Sales for the Monsanto crop protection products division increased more than 5 percent.

CORN ANALYSIS

Corn closed the week 3.75 cents lower.

Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 25.9 million bushels and the smallest weekly total since January.

Total annual exports total of 1.652 billion bushels are now 167 percent larger than last year.

Corn has scored a technical breakout, but has failed to extend the rally as commercial selling limited gains.

If prices pullback, look for the commercials to become buyers as they will view pullbacks in the market as buying opportunities in the next two weeks with forecasts for a cool, wet spring across the key growing regions during the planting season.

Thus commercial entities, as well as large speculators, will want to be long ahead of the growing season.

Highs for corn are likely to be scored during the summer with weather premiums added in the spring.

The USDA made easy math the feature for corn in the April crop report, cutting the carryout by 125 mb and then increasing exports by the same amount.

Strategy and outlook: Producers are 100 percent sold of 2013/14 crop.

Producers are 10 percent sold of the 2014/15 crop. Sell another 15 percent if December futures hit at $5.24.

SOYBEANS ANALYSIS

Soybeans closed the week 8.25 cents lower from last week.

Last week, private exporters reported sales of 120,000 metric tons of soybeans to China and 330,000 mt of soybeans to an unknown destination.

Weekly export sales of soybeans showed 2.9 mb for old crop and bringing total commitments to 1.638 bb, and are 107 percent of the USDA’s new 2013/14 export projections.

The USDA is assuming foreign buyers will eventually cancel U.S. purchases in favor of cheaper South American product.

However, we have never seen net cancelations in the second half of a marketing year.

Like corn, technical breaks should be well supported by commercial entities as they begin to position long ahead of the growing season as they wish to extend coverage in case prices rally sharply on a weather-related event.

In its latest supply/demand report, USDA raised imports by 30 mb, crush was cut 5 mb, exports were increased 50 mb, seed usage was up 8 mb, and residual went to zero resulting in a cut to carryout of 10 mb, from 145 mb to 135 mb.

There is no reason to believe the market has scored annual highs yet. Prices need to rally to ration the old crop stocks.

Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop.

They should re-own 50 percent of the 2013/14 crop when prices reach $13.78.

Producers are 10 percent sold of 2014/15 production and should sell another 15 percent at $12.50.

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. Brian Hoops can be reached at (605) 660-1155.

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