×
×
homepage logo

BRIAN HOOPS

By Staff | Nov 11, 2016

Cash rents

The good news, according to USDA-NASS data, cropland cash rents retreated 6 percent nationwide in 2016 compared to 2015. That’s the first time national cash rent rates have declined since 2007.

The not-so-good news? Rental rates were uneven down by as much as 6 to 7 percent in some states, but increasing by 5 percent or more in other states.

A total of 13 states saw average cash rent go up for 2016. The states that saw increased cash rent rates include Idaho, Utah, Arizona, New Mexico, Wisconsin, Michigan, Ohio, West Virginia, Virginia, Delaware, New Jersey, South Carolina and Mississippi.

In the eastern Corn Belt – Illinois, Iowa, Minnesota, Wisconsin – cash rental rates were higher. Pasture rental rates in Oklahoma, Arkansas, Louisiana,

and Florida were sharply higher in 2016.

ADM profits

U.S. agricultural products trader Archer Daniels Midland Co reported a far better-than-expected third-quarter profit as higher U.S. exports of corn and soybeans boosted volumes and

margins. ADM makes money buying, selling, storing, transporting and processing grains and oilseeds around the world.

Margins are typically thin, but volumes are massive when crop supplies are abundant and prices are low, as they are now. Export sales of corn and soybeans from the United States were well ahead of the normal pace in the third quarter due to crop shortages in South America.

Net earnings attributable to the company rose to $341 million from $252 million a year earlier.

CORN ANALYSIS

Corn closed the week 7.25 cents lower.

Last week, private exporters reported sales of 644,344 metric tons of corn to Mexico; 136,000 mt of corn to South Korea; 110,973 mt to an unknown destination and 111,000 mt of sorghum to an unknown destination.

Weekly export sales of corn showed a total of 58 million bushels (1.47 million mt) with all for the 2016-2017 marketing year.

This was above the 29 mb (736,200 mt) needed this week to be on pace with USDA’s October demand projection of 2.225 billion bushels.

NASS reported U.S. corn harvest advanced to 75 percent, up from 61 percent last week and exactly in line with the average pace of 75 percent.

Harvest is nearly completed in the majority of the Corn Belt as unseasonably dry conditions have allowed combines and fall tillage equipment to rapidly harvest this year’s crop and finish much of the fall fieldwork.

A higher quality crop has been harvested with producers reporting little drying costs associated with this year’s corn.

Yield estimate continue to trend mixed and the November supply/demand report will likely show a slightly smaller corn crop compared to a month ago.

Farmer selling will slow and basis levels will likely improve during the winter and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels.

Strategy and outlook: Use rallies to sell inventory.

SOYBEANS ANALYSIS

Soybeans closed the week 2.75 cents lower.

Last week, private exporters reported sales of 396,000 mt to China and 120,000 mt of soybeans to an unknown destination.

Weekly export sales of soybeans showed a total of 94.6 mb (2.57 mmt) with 92.4 mb (2.51 mmt) for the 2016-2017 marketing year.

This was well above the 17.4 mb (472,900 mt) needed this week to be on pace with USDA’s October demand projection of 2.025 bb.

Soybeans were 87 percent harvested, up from 76 percent last week and just ahead of the average pace of 85 percent.

Harvest is nearly completed in the majority of the Corn Belt as unseasonably dry conditions have allowed combines and fall tillage equipment to rapidly harvest this year’s crop and finish much of the fall fieldwork.

Yield estimate continue to impress and the November supply/demand report will likely show a larger soybean crop compared to a month ago.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter. The huge demand base for soybeans comes in the form of strong export demand and increased consumption of oil for soy bio-diesel usage.

Despite the demand, ending stocks are forecast increase to above 400 mb. The market will be anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.

Weather during the South American growing season will be closely watched.

Strategy and outlook: Use rallies to sell inventory.

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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page