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BRIAN HOOPS

By Staff | Jan 20, 2017

Cargill reports 2Q profit

Global commodities trader Cargill Inc reported a sharply higher adjusted quarterly profit led by strong results from its beef and turkey businesses in North America. In the second quarter ended Nov. 30, Cargill’s adjusted operating earnings jumped nearly 80 percent to $1.03 billion, up from $574 million in the same quarter a year earlier.

Quarterly net income including one-time items fell to $986 million from $1.39 billion a year earlier, when sales of Cargill’s U.S. pork business and a steel mill bolstered results. Revenue slipped to $26.9 billion from $27.3 billion in the same quarter a year ago.

New AgSec

President-elect Donald Trump and his transition team met with five prospective candidates for the agriculture secretary job. Three Texans visited Trump’s Florida estate – former agriculture commissioner Susan Combs, current Texas agriculture commissioner Sid Miller, and former congressman Henry Bonilla. Trump also met with former California Lt. Gov. Abel Maldonado and former USDA undersecretary Elsa Murano.

FTC ruling

In response to a Federal Trade Commission ruling, Boehringer Ingelheim has agreed to spin off five of its animal health products. Boehringer Ingelheim and Sanofi plan to merge, but, this divestiture is required to avoid an anticompetitive situation. With this decision, Boehringer Ingelheim is selling three types of animal vaccines to Eli Lilly and its Elanco Animal Health Division. Two categories of parasite control products will go to Bayer.

Seeks ag protection

In a letter to President-elect Donald Trump and Vice President-elect Mike Pence, the American Soybean Association and a coalition of 15 other farmer organizations called on the incoming administration to protect and enhance the positive impact of agricultural trade on jobs and growth in rural America.

The groups also noted the special importance of trading relationships with China, Canada and Mexico, U.S. farmers’ and ranchers’ first-, second- and third-largest export markets.

Monsanto 1Q earnings

Monsanto’s first quarter earnings per share were higher than last year thanks to the strength of its South American business. Monsanto had net income of $29 million in the first quarter, compared to a $253 million loss in the same period last year. Seeds and genomics sales jumped 32 percent, and total sales were up 19 percent. Monsanto had better than a 25 percent increase in planted corn acres in Argentina, and more than a 10 percent increase in Brazil, along with double-digit price increases in corn germplasm in both countries.

In 2017, Monsanto said it remains focused on delivering on its operational plan and key business milestones while simultaneously working with Bayer on the necessary steps to finalize the deal to merge the companies. That merger is targeted for the end of this calendar year.

CORN ANALYSIS

Corn closed the week unchanged.

Last week, private exporters announced sales of 607,588 metric tons to an unknown destination; 130,000 mt of corn to Taiwan and 110,000 mt of corn to Japan.

Weekly export sales of corn showed a total of 29.7 million bushels (755,000 mt) with 23.8 mb (603,300 mt) for the 2016-2017 marketing year. This was slightly above the 23.3 mb (591,400 mt) needed this week to be on pace with USDA’s December demand projection of 2.225 billion bushel.

China announced it would be imposing anti-dumping duties on U.S. DDG imports. The duties are expected to range from 42.2 percent to 53.7 percent and their anti-subsidy tariffs are expected to range from 11.2 percent to 12 percent.

This compares to 33.8 percent and 10 to 10.7 percent, respectively, and may kill future U.S. exports to China.

In the monthly supply/demand report, the USDA lowered the final 2016/17 corn production figure to 15.148 billion bushels versus 15.226 bb in December.

Harvested acres were slightly lower to 86.7 million acres versus 86.87 million acres in December.

Yield was also lowered to 174.6 bpa versus 175.3 bpa in December. With the lower production figures, U.S. corn carryout was lowered to 2.355 bb versus 2.403 bb in December.

World carryout figures were supportive at 221.0 mmt versus 222.25 mmt in December.

December 1 grain stocks were negative at 12.384 bb versus 11.238 bb in December last year.

Strategy and outlook: A rally into weekly resistance was a great time to sell inventory, look to re-own on weekly support.

SOYBEANS ANALYSIS

Soybeans closed the week 49 cents higher.

Last week, private exporters reported sales 132,000 mts of soybeans to an unknown destination.

Weekly export sales of soybeans showed a total of 10.7 mb (291,900 mt) with 12.8 mb (348,900 mt) for the 2016- 2017 marketing year offset in part by a cancelation (unknown destination) of 2.1 mb (57,000 mt) for 2017-2018.

The 2016-2017 total was above the 8.2 mb (222,500 mt) needed this week to be on pace with USDA’s December demand projection of 2.05 bb.

In the monthly supply/demand report, the USDA lowered final 2016/17 production to 4.307 bb versus 4.361 estimated in December.

Harvested acres were slightly lowered than previously thought at 82.7 million acres versus 83 million acres in December. Yield was also lowered to 52.1 bpa versus 52.5 bpa in December.

U.S. soybean carryout fell to 420 mb versus 480 mb last month. World soybean carryout was 82.3 million metric tons versus 82.85 mmt in December. Quarterly stocks as of December 1 grain were 2.895 bb versus 2.715 bb in December last year.

Strategy and outlook: Prices rallied off support as forecasted by the COT report. Maintain re-ownership strategies.

Brian Hoops can be reached at (605) 660-1155.

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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