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BRIAN HOOPS

By Staff | Apr 17, 2015

The International Grains Council forecasts a three percent decline in this year s total world grain production, compared to a year ago, led by a five percent drop in corn production.

World corn ending stocks are projected to fall 10 percent, with stocks among major exporters forecast to decline 24 percent.

The global wheat crop is expected to be down about one percent, and ending stocks will decline 2 million tons.

Due to slight adjustments for South America, this year’s world soybean crop estimate, and ending stocks, are cut 1 million tons each.

However, global soybean ending stocks are projected to rise 47 percent this year to a record high.

CORN ANALYSIS

Corn closed the week 9.75 cents lower.

Last week, private exporters reported sale of 131,172 metric tons of corn to an unknown destination.

Weekly export sales showed corn sales at 25.5 million bushels, the best in five weeks.

Annual corn sales now have reached 1.496 billion bushels and sales are now 8 percent below a year ago.

The monthly supply/demand report saw 2014/15 corn ending stocks reported at 1.827 bb compared to 1.777 bb last month and 1.232 bb in 2013/14.

USDA raised 2014/15 ending stocks by 50 mb, a direct result from a similar reduction in feed and residual.

Ethanol and exports were left unchanged.

Like the month of March, April will have commercial and seasonal traders buying weakness for a potential summer weather rally as the uncertainty of the growing season will have end users very nervous about weather, especially after finding out U.S. farmers will plant less corn this year.

Midwest U.S. producers will begin to seeding corn acres by mid-April and weather will become very important to pricing by May.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop, re-owned 50 percent with July options. Sold 10 percent of 2015 production.

Sell 15 percent at $4.65 December. Bought calls to re-own 50 percent of previous sales.

SOYBEANS ANALYSIS

Soybeans closed the week 32.5 cents lower.

Last week, private exporters reported a sale of 140,000 mt of soybeans to an unknown destination for the 2014/15 marketing year and 165,000 mt of beans to China for the 2015/16

marketing year, as well as 60,000 mt of soybeans to an unknown destination for 2015/16.

Weekly export sales of soybeans were a negative 6.5 mb. Annual sales are still record large at 1.775 bb, up 9 percent from a year ago, but clearly slowing.

In the monthly supply/demand report, 2014/15 ending stocks were reported at 370 mb versus 385 mb last month and 92 mb in 2013/14.

The USDA increased imports 5 mb, seed 6 mb and residual 14 mb, which lowered ending stocks by 15 million bushels.

The soybean market has one simple job, to rally and compete with corn this spring so it does not lose any acres.

Support comes from an effort to return to profitability to encourage farmers to not switch from corn to soybeans.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. Bought calls on 50 percent of 2014/15 production to re-own previous sales.

Sold 10 percent of 2015/16 production. Sell 15 percent at $10.95 November.

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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