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BRIAN HOOPS

By Staff | Jun 27, 2014

Brazil’s soybeans

Brazil’s crop supply agency, Conab, has reduced its soybean crop estimate by a half-million tons, to 86.1 million tons.

That still exceeds the previous year’s record crop by almost 6 percent. It is, however, below USDA’s estimate of an 87.5 million-ton Brazilian bean crop.

Conab also raised its estimate of Brazil’s corn crop by almost 3 million tons, to 77.9 million tons. That’s the second-largest corn crop ever in Brazil.

Housing sows

Cargill is continuing its commitment to group housing for its sows. Company-owned facilities will be 100 percent group housing by the end of calendar 2015.

Contract hog farms that contain Cargill-owned sows will transition to 100 percent group housing by the end of calendar 2017.

Hogs produced by Cargill-owned sows represent approximately 30 percent of the total hogs processed annually at Cargill’s two pork processing facilities in Illinois and Iowa.

China beef exports

A Chinese delegation is on the way to the U.S. to review U.S. beef production standards.

The Chinese market has been closed to U.S. beef since the BSE discovery in 2003.

After a briefing in Washington, D.C., the Chinese delegation will spend the next two weeks touring ranches, processing plants and feed mills.

U.S. Meat Export Federation officials are hoping this trip will result in a staggered reopening of this market for U.S. beef.

Iowa land values

The average price of high quality farmland in Iowa declined 2 percent from a year ago.

Farmers National Co. puts the average value at $12,250 per acre in Iowa, and said prices remained relatively stable despite projected dramatic downturns due to tight land supplies and positive incomes.

Prices are unchanged in Illinois and Nebraska, where average values range from $12,000 to $12,500 per acre.

Ag appropriations

The Senate began its debate on the fiscal year 2015 Agriculture Appropriations Bill.

The Senate bill, which passed out of the appropriations committee in May with no objections, is now being considered as part of a minibus of appropriations bills that also includes commerce, justice, science and transportation, and housing and urban development appropriations.

It is still unclear how debate for the agriculture spending bill will progress since no agreement on amendments has been made.

CORN ANALYSIS

Corn closed the week 3.75 cents higher.

Last week, private exporters announced a sale of 134,500 metric tons of U.S. corn to Mexico for the 2014/15 marketing year.

Weekly export sales of corn showed 4.3 mb of old crop sales and 3.1 mb of new crop sales.

In the weekly crop progress report, the USDA reported the corn crop is the second highest rated crop in the last 23 years.

NASS reported corn conditions improved 1 percent, now 76 percent good-to-excellent versuss 64 percent last year.

The end of the month will have the quarterly stocks and planting intentions report from the USDA. This report could be a shocker to the market as some reports have farmers decreasing seeded acres from the last report in March due to some farmer replanting in the Midwest.

Corn has removed all weather premium from prices already this growing season. If no weather threats are posted this summer, look for chart support of $4.30 to be broken in July.

But this support should hold until pollination has occurred. Corn is pollinating in Northern Missouri. Seasonal highs are usually formed by June 23.

Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and own 480 puts on 50 percent of the crop. They bought out-of-the-money December calls on 25 percent of sales as insurance.

SOYBEANS ANALYSIS

Soybeans closed the week 12 cents higher from last week.

Last week, private exporters announced sales of 140,000 mt of U.S. soybeans to an unknown destination for the 2013/14 marketing year and 110,000 mt of U.S. soybeans to an unknown destination for the 2014/15 marketing year.

Weekly export sales of soybeans showed 3.6 mb for old crop and 10.5 mb for new crop sales.

In the weekly crop progress report, soybean conditions fell 1 percent, now 73 percent g/e versus 64 percent last year.

Despite the slip in ratings, this is still the second best rating in history.

NOPA crush for May reported at 128.8 mb, slightly above the average trade guess of 127 mb, but down from last month’s 132.7 mb.

The month of June is not the key reproductive month for soybeans, however, the acreage report at the end of the month could be a shocker to the trade.

The market has already anticipated a record seeded acreage, however if producers planted more acres to corn than previously thought, prices could find strength after the report’s release.

Seasonal highs are usually formed by June 23.

Strategy and outlook: Producers are 25 percent sold of 2014/15 production. Sell another 10 percent at $12.63 against March 2015.

Buy November puts on 50 percent of production if November hits $12.60.

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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