Corn closed the week 7 1/2 cents lower. Last week, private exporters reported 250,000 mts of corn to Columbia.
Weekly export sales of corn showed a total of 18.7 mb (475,000 mt) with 1.4 mb (36,700 mt) for the 2016-2017 marketing year. This was on par with the 1.3 mb (31,800 mt) needed this week to be on pace with USDA’s July demand projection of 2.225 bb.
The weekly crop conditions report showed U.S. corn crop conditions at 61 percent good/excellent versus 62 percent expected (61-63 percent range of ideas), 62 percent last week and 76 percent last year.
In the EIA report, U.S. ethanol production was down 10,000 barrels per day to just over one million barrels per day. This is the lowest since June of 2016. Ahead of this week’s USDA report, FC Stone issued the results of their client survey which puts the U.S. corn yield at 162.8 bpa for a crop of 13.59 billion bushels. Informa updated U.S. corn yields at 165.9 bpa with a production figure of 13.852 bb and a Farm Futures survey points towards a 163.5 bpa corn yield. The key to the report will be how much lower the USDA is willing to lower yields prior to any test plot data or actual farm harvest data.
An early frost during the kernel filling stage would also send prices higher as a killing frost could potentially hurt yields. Seasonals show a small rally during the August timeframe, before turning lower as harvest begins in September. Look for commercial and end user interests to become buyers during the early stages of harvest as they will try to buy when the basis levels are largest.
Strategy and outlook
Producers should only make sales that address cash flow need during harvest.
Soybeans closed the week 55 1/2 cents lower. Last week, private exporters did not report any private sales. Weekly export sales of soybeans showed a total of 22.1 mb (600,900 mt) with 8.6 mb (233,400 mt) for the 2016-2017 marketing year. This raised total sales to 2.233 bb, or 6 percent above USDA’s July demand projection of 2.100 bb. In the weekly crop conditions report, NASS reported U,S, soybean crop conditions at 59 percent good/excellent versus 57 percent expected (56-59 percent range of ideas), 57 percent last week versus 72 percent last year with good improvements noted in eastern belt conditions. August is the key yield development month for soybeans, not July.
For new crop soybean pricing, ignore demand signals as weather and its impact on the developing crop remains 95 percent of our pricing influence. By August 20 to the 30, soybeans will have completely filled the pod, and seasonal highs will be in. Beans need moisture in the pod setting stage to achieve normal yields. Seasonally, soybeans post lows in the month of August in the first half of the month and rally into Labor Day where the highs will be formed before harvest pressure weighs on the market.
Ahead of this week’s key report, FC Stone estimated soybean yield at 47.7 bpa and a crop size of 4.235 bb, while Informa forecast soybeans yields to be 47.3 bpa with production of 4.196 bb. A Farm Futures survey looks for a 47.5 bpa soybean yield.
Stategy and outlook
Producers should make sales that address cash flow need during harvest and establish downside protection on the balance.
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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