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BRIAN HOOPS

By Staff | May 20, 2016

CORN ANALYSIS

Corn closed the week 13.75 cents higher. Last week, private exporters reported sales of 210,000 metric tons of corn to Saudi Arabia; 170,000 mt of corn to Japan and 120,000 mt of corn to an unknown destination.

Weekly export sales of corn showed a total of 49.4 mb (1,255,700 mt) with 43.5 mb (1,105,300 mt) for the 2015-2016 marketing year.

This was above the 13.8 mb (350,600 mt) needed to be on pace with USDA’s revised demand projection of 1.72 billion bushels.

The weekly crop progress report showed U.S. corn plantings have reached 64 percent planted versus expectations of 50 percent to 55 percent completed.

This was up from 45 percent last week and is slightly behind last year’s pace of 69 percent, however it is still above the average pace of 50 percent.

In the monthly supply/demand report, it is rare to say that a new record corn production forecast and ending stocks over 2 bb is bullish, but as these figures were not as bearish as the trade had feared and prices rallied following the report’s release.

The USDA forecast U.S. corn production for 2016/17 at a new record of 14.4 bb, up 829 mb from 2015/16 and 214 mb higher than the previous record in 2014/15.

A 5.6-million-acre increase in corn plantings more than offset a small reduction in yield. The U.S. corn yield is projected at 168 bushels per acre, down 0.4 bpa from 2015/16.

Corn supplies for 2016/17 are projected at a record 16.3 bb. U.S. corn usage is projected at a record 14.1 bb, 4 percent higher than for 2015/16.

Feed and residual use for 2016/17 is projected 300 mb higher. This left ending stocks at 2.153 bb, normally a huge number but this was below trade estimates of 2.25 bb.

Strategy and outlook: Producers should use weakness during May to re-own sales with options to manage price risk and summer volatility.

SOYBEANS ANALYSIS

Soybeans closed the week 24.75 cents higher.

Last week, private exporters reported sales of 420,000 mt of soybeans to an unknown destination; 50,000 mt of bean oil to an unknown destination and 40,000 mt of bean oil

to an unknown destination.

Weekly export sales of soybeans showed a total of 8.1 mb (219,300 mt) with 7.8 mb (212,400 mt) for the 2015-2016 marketing year. This was above the 2.6 mb (70,200 mt) needed to be on pace with USDA’s revised demand projection of 1.740 bb.

The weekly crop progress report pegged U.S. soybean plantings at 23 percent seeded versus 20 percent to 22 percent that was expected. Last year, 26 percent was seeded and is above the average pace of 16 percent completed.

Key states of Iowa and Illinois are only 29 percent and 19 percent planted, respectively.

In the monthly supply/demand report, U.S. soybean production is projected at 3.8 bb, down 129 mb from the 2015 crop amid a lower harvested area and trend yields.

The U.S. soybean crush for 2016/17 is projected at 1.915 bb, up 35 million from 2015/16.

Soybean exports are forecast at 1.885 mb, up 145 mb from the revised 2015/16 projection. U.S. ending stocks for 2016/17 are forecast at 305 million bushels, well below the average trade guess of 405 mb.

Strategy and outlook: Producers should look to re-own sales with options to manage price risk and summer volatility during price weakness in May.

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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