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BRIAN HOOPS

By Staff | Apr 28, 2017

The Kansas City Federal Reserve District reports subdued farm income, continued low commodity prices and weak agricultural credit conditions.

Almost a third of banks said lending standards tightened for agricultural loans.

“Profit margins were expected to remain weak for corn and wheat producers, although some input costs were expected to moderate from last

year,” the Kansas City report said. “Soybean prices also decreased in March but were slightly

higher than a year ago. With soybean prices somewhat more favorable, producers were expected

to plant more soybeans and less corn and wheat.”

Cattle prices increased slightly in March and hog prices remained higher than a year ago. Slightly higher prices and lower input

costs improved profit margins modestly for both hog and cattle producers, the Kansas City report

said.

CORN

ANALYSIS

Corn closed the week 14 and a 1/4 cents lower. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 33.4 mb (848,200 mt) with 29.8 mb (756,400) for the 2016-2017

marketing year. This was above the 13.5 mb (343,700 mt) needed this week to be on pace with USDA’s April

demand projection of 2.225 bb. The weekly crop progress report placed U.S. corn plantings at 6 percent complete versus

8 percent expected (6-11 percent range of ideas) which is up from 3 percent last week but below the 12 percent last year and 9 percent average.

State breakdown shows Texas 60 percent planted, Missouri at 17 percent, Kansas 9 percent, Illinois 6 percent, Indiana 4 percent, Nebraska

3 percent, Iowa 2 percent, and Minnesota 1 percent, with all other states zero percent planted.

In the weekly EIA report, ethanol production was 993k bpd, under 1 million barrels for the 2nd straight week and ethanol stocks increased

slightly while the market was expecting a decline in stocks.

With Midwest U.S. producers seeding corn acres, weather will become very important to pricing by May. If the month of April continues to be 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.

Strategy and Outlook

Commercials are bullish and producers should have re-owned previous sales during March ahead of the growing

season.

SOYBEANS

ANALYSIS

Soybeans closed the week 7 cents lower. Last week, private exporters reported sale of 146,000 mts of soybeans to

an unknown destination for the 2016/17 marketing year.

Weekly export sales of soybeans showed a total of 8.3 mb (225,000 mt) with 7.8 mb (211,000 mt) for the 2016

-2017 marketing year. Total sales (including outstanding) are now 2.047 bb, above USDA’s April demand projection

of 2.025 bb. The NOPA monthly soybean crush data was a disappointment to the trade as March crush

was reported at 153.1 million bushels, solidly below average market expectations of 156.7 million bushels,

near the lower end of the range of ideas of 151.8-159.9 million and 2.3 percent below last year’s March crush of

156.7 million bushels. This was the lowest March NOPA crush in four years. This also marked the second consecutive

month in which NOPA crush was below last year as February was down 2.3 percent.

Soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans. Look

for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks. Commercials

are bullish to the entire soy complex with meal and bean oil resting just above key technical support.

Strategy and Outlook

Maintain re-ownership strategies into the summer months. Beans fell below key support, a great time to increase

re-ownership.

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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