CHS is reporting net income of $128 million for the past fiscal year. That compares to $424 million in FY2016. A significant loss was linked to a Brazilian trading partner that went into bankruptcy-like proceedings. Both the CHS energy and agriculture business segments suffered losses. CHS is the largest farmer-owned cooperative in the U.S.
Corn closed the week $.01 1/4 lower. Last week, private exporters did not announce any private sales: Weekly export sales of corn showed a total of 43.6 mb (1,106,400 mt) with 42.6 mb (1,080,900 mt) for the 2017-2018 marketing year. This put total marketing year sales at 843.8 mb, 27 percent less than the previous marketing year. In the weekly crop progress report, NASS reported US corn harvest advanced to 90 percent complete versus 91percent expected, up from 83 percent last week but still below the 95 percent average pace. In the EIA report, weekly ethanol production was up 20 thousand barrels per day to 1,074 barrels per day, a new record. Current ethanol stocks came in at 21.897 million barrels which is the largest weekly inventory since the week of July 14th. The International Grains Council raised their estimate for world corn production by 6 mmt to 1.04 billion metric tonnes, in part due to an upward revision for the U.S. corn crop. Argentine corn planting progress is slightly ahead of last year at 50 percent and the normal pace.
Strategy and outlook
As prices rally during the winter months, producers look to sell the carry and lock in basis as it narrows. Selling inventory on rallies and replacing ownership with option strategies not only decreases risk, but also allows producers to free up equity and generates cash flow.
Soybeans closed the week $.00 1/2 higher. Last week, private exporters announced sale of 130,0000 mts of soybeans to China.
Weekly export sales of soybeans showed a total of 33.2 mb (903,600 mt) 31.9 mb (869,100 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.229 bb, 17 percent less than the previous marketing year. In the weekly crop progress report, NASS reported U.S. soybean harvest is 96 percent complete versus 97 percent expected versus 93 percent last week and close to the 97 percent average pace. Weather in Brazil looks nearly ideal but weather in Argentina is threatening and providing support for prices. Southern Argentina remains very dry and crop stress is noted in soybean and corn areas. Planting progress in Argentina is slightly ahead of last year at 41percent and inline with the average pace of 42 percent.
Strategy and outlook
Producers should make sales as prices rally into resistance. Selling inventory on rallies and replacing ownership with option strategies not only decreases risk, but also allows producers to free up equity and generates cash flow.
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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