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BRIAN HOOPS

By Staff | Apr 15, 2016

Monsanto

Monsanto Co., the world’s largest seed company, reported a 25.4 percent fall in quarterly profit, hurt by steep discounting on its seeds and a stronger dollar.

Farmers in the U.S. have been spending less on everything from fertilizers to seeds as the prices of grains hover near five-year lows and incomes have fallen to their lowest since 2002.

China and soybeans

The U.S. ag attache in Beijing said China’s soybean imports hit another record at 78.3 million tons last marketing year, absorbing 60 percent of total world exports and 58 percent of total U.S. soybean exports.

China’s soybean imports are estimated to set another record at 82 million tons this marketing year, and are forecast to reach 84.5 million tons in the 2016/17 marketing year.

Overall, China’s domestic oilseed production continues to decline, while demand for oilseed products surges ahead.

Chinese consumption of meat, seafood, and vegetable oils and soybeans for food processing continues its unrelenting growth, fueled by rising affluence, urbanization, and expanding consumer preferences.

CORN ANALYSIS

Corn closed the week 8.25 cents higher.

Last week, private exporters reported sales of 120,000 metric tons of corn to an unknown destination, and 145,544 mt of corn to Japan.

Weekly export sales of corn showed a total of 44.1 mb (1 .12 mt) with 37.2 mb (945,200 mt) for the 2015-2016 marketing year.

Total sales for 2015-2016 were 1.283 billion bushels, 14 percent behind last year’s 1.49 bb for the same week.

USDA is projecting a year-to-year decrease of 11 percent. The month of 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 nervous about weather and ending supplies.

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

If the month of April is wet and hampers producers planting efforts, look for December corn to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Currently, the U.S. is experiencing a pattern of cool weather and soil temperatures that will need to warm up before corn will emerge. The largest acreage estimate of the year has been seen and remember we still have to produce a crop this year and smart traders remember the adage “its not how much you plant, its what you grow.”

Strategy and outlook: Producers should use a rally during the spring planting timeframe to liquidate remaining inventory and begin to become defensive on new crop corn sales.

SOYBEANS ANALYSIS

Soybeans closed the week 2 cents lower.

Last week, private exporters did not report any private sales. Weekly export sales of soybeans showed a total of 15.5 million bushels (421,900 mt) with 15.4 mb (420,400 mt) for the 2015-2016 marketing year.

Total sales for 2015-2016 were 1.63 bb, 8 percent behind last year’s 1.77 bb for the same week.

USDA is projecting a year-to-year decrease of 8 percent.

Soybean acreage is very likely to increase in the June report as producers will switch corn to soybean acres due to profitability and possibly weather, if corn plantings become delayed in the month of April.

A range is likely to develop between $9.40 and $9.85 for November soybeans until the crop is seeded. The $9.85 was the high from last summer and will serve as resistance.

Producers should use rallies into this zone to make sales and manage their risk for the upcoming growing season.

In the month of April, the soybean market has one simple job, to compete against corn this spring so it does not lose acres. In April, soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans.

Also, a planting season that is slowed by heavy rains, will encourage farmers to switch plantings of corn over to soybeans, therefore look for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks.

Strategy and outlook: Producers should use a rally during the spring planting timeframe to liquidate remaining inventory and begin to become defensive on new crop soybean sales.

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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