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BRIAN HOOPS

By Staff | Aug 18, 2017

The Trump Administration’s 2018 budget proposal called for additional cuts to crop insurance.

Senate Agriculture Committee Chairman Pat Roberts has addressed this issue with the Office of Management and Budget and the White House. During a farm bill hearing this past week, Roberts said we are not going to cut crop insurance, period.

Corn analysis

Corn closed the week 61/2 cents lower. Last week, private exporters reported 180,000 mts of corn to Mexico. Weekly export sales of corn showed a total of 26.8 mb (475,000 mt) with 2.0 mb (52,000 mt) for the 2016-2017 marketing year. This was slightly above the 1.2 mb (30,800 mt) needed this week to be on pace with USDA’s July demand projection of 2.225 bb.

In the weekly crop conditions report, NASS reported U.S. corn crop conditions at 60 percent good/excellent versus 61 percent expected (59-63 percent range of ideas), 61 percent last week and 74 percent last year.

The monthly supply/demand report was bearish as the USDA only lowered corn yield to 169.5 bpa, well above the highest trade estimate and down 1.2 bpa from their previous estimate. The yield would be produce the third largest crop in history, despite the lowest crop rating in the last 10 years. U.S. production of 14.153 bb is offset by 14.30 bb of usage, leaving ending stocks at a very comfortable 2.273 bb. This was above the estimates of 1.940 bb. 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 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 analysis

Soybeans closed the week 11 1/4 cents lower. Last week, private exporters 206,000 mts to an unknown destination; 120,000 mts to China and a cancelation of 130,000 mts to an unknown destination.

Weekly export sales of soybeans showed a total of 25.1 mb (684,300 mt) with 1.7 mb (45,000 mt) for the 2016-2017 marketing year. This raised total sales to 2.234 bb, or 6 percent above USDA’s July demand projection of 2.100 bb. In the weekly crop conditions report, NASS U.S. soybean crop conditions improved 1 percent to 60 percent good/excellent versus 59 percent expected (58-61 percent range of ideas), 59 percent last week and 72 percent last year.

The supply/demand report was bearish as soybean yields were actually increased by 1.4 bpa to 49.4 bpa, which was a major surprise.

This yield forecast is the largest ever for August and the second largest yield in history. Usage increased by 66 mb, a new record and is 150 mb more than last year. Ending stocks are estimated at 475 mb, up 15mb from last month and 40 mb larger than trade estimates. 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. Producers should protect against lower prices if a rally develops.

Strategy 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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