The bottom may have been seen in the farm economy. American Farm Bureau Federation Chief Economist Bob Young expects a small adjustment upward this year. I think it’s certainly possible farm income could be up in 2017. I’m not saying big numbers, but I think the bottom may have occurred in 2016. We could see some cost savings as well. Hopefully, we aren’t moving down further than we did in 2016.
Corn closed the week $.001/4 lower. Last week, private exporters did not report any private sales.
Weekly export sales of corn showed a total of 8.8 mb (222,600 mt) with 10.9 mb (277,700) sold for the 2016-2017 marketing year. This was above the 10.2 mb (259,100 mt) needed this week to be on pace with USDA’s May demand projection of 2.225 bb.
In the weekly crop progress report, the USDA reported U.S. corn plantings at 47 percent complete versus 44 percent expected (39-48 percent range of ideas), 34 percent last week, 61percent last year and 52 percent average planted. State breakdown shows Texas 77 percent planted, Missouri 77 percent, Kansas 45 percent, Illinois 65 percent, Indiana 51 percent, Nebraska 48 percent, Iowa 52 percent, and Minnesota 35 percent.
In the weekly EIA report, ethanol production posted a strong seasonal rebound with the highest production in five weeks at 1,006,000 bpd. In the monthly supply/demand report, the USDA issued the first production forecasts of the 2017 crop as well as updated projected domestic and world ending stocks. Corn production was estimated at 14.065 bb with a yield of 170.7 bpa, resulting in a U.S. reserve stocks of 2.110 bb. Last year’s yield was 174.6 bpa. World corn stocks were 195.3 mmts well below last year’s 223.0 mmts.
Strategy and outlook
Commercials are bullish and producers should have re-owned previous sales during March ahead of the growing season.
Soybeans and analysis
Soybeans closed the week 10 1/4 cents lower. Last week, private exporters did not report any private sales.
Weekly export sales of soybeans showed a total of 16.6 mb (451,400 mt) with 14.0 mb (381,400 mt) for the 2016-2017 marketing year. This raised total sales to 2.097 bb, above USDA’s revised May demand projection of 2.050 bb. The weekly crop progress report placed U.S. soybean seeding at 14 percent complete versus 16 percent expected (10-20 percent range of ideas), 10 percent last week, 21 percent last year and 17 percent average. In the monthly supply/demand report, U.S. soybean production was estimated at 4.255 bb with a yield of 48.0 bpa.
This is well below last year’s yield of 52.1 bpa. This placed ending stocks for soybeans at 480 mb, well below trade estimates of 584 mb.
World stocks of soybeans were estimated at 88.8 mmts. Commercials are bullish to the entire soy complex with meal and bean oil resting just above key technical support. Soybeans have broken their technical downtrend on the weekly charts. If a weather problem develops funds will be aggressive in covering short positions as they know price swings can be large during the growing season.
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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