Crop insurance restored

The Senate Ag Committee leadership is applauding the action the House took in the transportation committee to restore $3 billion in cuts to crop insurance.

Senate Ag Committee Chair Pat Roberts R-Kansas; and ranking member Debbie Stabenow, D-Michigan; issued a joint statement thanking the committee for restoring those cuts.

National Farmers Union president Roger Johnson said he is grateful to House leadership for efforts to make crop insurance whole and avoid such cuts to other agriculture programs.

Lowered exports

The USDA has sharply lowered its forecast for fiscal year 2016 ag exports.

USDA analysts cut the export estimate by $7 billion, down to $131.5 billion.

USDA senior economist Sharon Sydow said the trend of lower prices and stronger competition has intensified.

Lower Chinese demand is a big factor in the lower numbers.

USDA cut its estimate of Chinese purchases by 2.3 billion dollars.

CORN ANALYSIS

Corn closed the week 4.75 cents lower.

Last week, private exporters reported a sale of 115,000 metric tons of corn to Mexico.

Weekly export sales showed corn sales were 43.2 mb, the second largest weekly sale this marketing year.

Annual sales are 716 mb, or 23 percent, slower than last year’s pace.

As expected, the USDA made only minor demand changes and U.S. production changes were held off until the final production estimate in January.

Corn stocks rose by 25 mb from last month to 1.785 billion bushels, above trade estimates of 1.768 bb.

U.S. corn exports were decreased by 50 mb, but ethanol usage was increased by 25 mb, resulting in a net increase of 25 mb for corn stocks.

World stocks of corn were unchanged at 211.9 million metric tons.

CONAB raised new crop corn production by 100,000 mt to 82 mmt.

Prices have only had a minor rally off of technical support as funds are covering shorts into the end of the year.

Without better export demand and any weather problems or threats, the rally looks to be limited.

Producers storing grain should look to use the rally to make sales of the product or options to be rewarded with a storage hedge.

Strategy and outlook: Producers should use this rally into the end of the year to make additional sales or buy protection if storing the crop until a weather scare develops in the summer months.

SOYBEANS ANALYSIS

Soybeans closed the week 34 cents lower.

Last week, private exporters announced sales of 120,000 mt of soybeans to an unknown destination.

Weekly export sales of new crop soybeans were 53.5 mb.

The export pace of the 2015/16 marketing year now stands at 1.264 bb, or down 15 percent mb from last year’s pace.

Soybean balance sheets were unchanged from last month at 465 mb, with no changes noted in any categories.

World soybean stocks were 82.6 mmt, down slightly from last month’s 82.9 mmt.

CONAB projects new crop Brazilian soybean production to reach a record 102.5 mmt, up 0.5 mmt from its forecast in November and much larger when compared to the USDA’s 100 mmt estimate.

The rally that developed in November looks to have ended with concerns about increased exports from Argentina capping the rally.

Producers who did not take advantage of rally need to protect themselves from lower prices the South American crop becomes available later this winter.

Strategy and outlook: Producers should have used the last rally to make additional sales or buy downside protection if storing until the summer.

Do not store unprotected soybeans into the winter months.

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.