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BRIAN HOOPS

By Staff | Jun 12, 2015

World oil grains

The International Grains Council has raised its estimates of world corn and wheat production by 10 million tons, each, from last month.

Ending stocks estimates are up 6 million tons for both, with next year’s global wheat stocks expected to be equal to the current marketing year.

World soybean production is projected to fall 4 million tons; however, soybean ending stocks are expected to increase 4 million tons, to a new record.

Soybean trade is expected to expand by about 4 percent, almost entirely due to China’s growing requirements.

The IGC projects rapeseed and canola ending stocks to fall by 26 percent next year.

CORN ANALYSIS

Corn closed the week 9.25 cents higher.

Last week, exporters did not announce any private sales.

Weekly export sales showed corn sales at 18 million bushels. Annual corn sales now have reached 1.696 billion bushels and sales are now down 154 mb compared to a year ago.

The weekly crop progress report from the USDA showed corn planting is nearly complete nationwide, while U.S. corn is 84 percent emerged compared to 79 percent on average.

USDA reported the U.S. corn crop conditions at 74 percent good-to-excellent versus 76 percent on average.

The 10-year average is 70 percent g/e for this time of year, so the crop is off to an excellent start.

During June, the outlook for prices is simple as weather and how it impacts the emerging crops will be 95 percent of the pricing movement.

The only other supply side news the market will deal with is the USDA monthly supply/demand crop report that was due Wednesday.

The market will want to be bullish as the key pollination time period is directly ahead of the market, however, it will take weather concerns during June to ignite a rally.

Producers will want to use options as a way to manage risk and provide price insurance. This will enable producers to make sales and cover the upside if weather is adverse.

The end of the month will also 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 replanting in the Midwest.

Seasonal highs are usually formed by June 23.

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

They sold 10 percent of 2015 production. Sell 15 percent at $4.65 December.

SOYBEANS ANALYSIS

Soybeans closed the week 4 cents higher.

Last week, exporters did not report any sales.

Weekly export sales of soybeans were 4.8 mb for old crop and only 12.8 mb for new crop sales.

New crop sales are at a fiveyear low.

The weekly crop progress report showed U.S. soybean planting is 71 percent complete with emergence at 49 percent.

The USDA was schueduled to issue the first soybean rating of the year on Wednesday.

There remains a lot of soybeans left to plant in Missouri, Kansas and southern Iowa with wet conditions prohibiting farmers from heading to fields.

The month of June looks to be similar to corn as we are in a weather market and weather forecasts will be the primary driving force.

The early soybean seeding pace started fast, but has slowed recently.

June is when soybeans develop root systems. Rains after June 15 will be viewed as beneficial to crop development and negative for prices.

However, dryness during June will send prices sharply higher.

Demand has remained strong for U.S. beans as the crops in Argentina and Brazil have been harvested and the unsold portion will soon hit the market.

Since soybeans are now in storage, China has returned as a strong buyer of U.S. soybeans.

Like the corn market, producers should use options as a risk management tool and price insurance. June is not the key reproductive month for soybeans; however, the market will be quick to add a premium into prices on less than ideal weather.

The acreage report at the end of the month could be a shocker to the trade. The market has already anticipated larger seeded acres; however if producers planted more acres to corn than previously thought due to a record fast corn planting pace, prices could find strength after the report’s release.

Seasonal highs are usually formed by June 23.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. They bought calls on 50 percent of 2014/15 production to re-own previous sales. They sold 10 percent of 2015/16 production. Sell 15 percent at $10.95 November.

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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