Despite a deep and painful slump for the American agricultural economy, sales of Deere & Co. signature green-and-yellow machines are rebounding. Why is Deere doing so well when conditions are deteriorating for the average farmer in the U.S., its largest market?

One answer is the increasing consolidation, with just 4 percent of U.S. farms producing two-thirds of the country’s food, according to the most recent census from the USDA.

Corn analysis

Corn closed the week $.00 1/2 lower. Last week, private exporters announced sales of 130,000 mts of corn to an unknown destination and 115,000 mts of corn to Egypt.

Weekly export sales of corn showed a total of 63.8 mb (1,620,900 mt) with 61.2 mb (1,555,400 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.478 bb, 12 percent less than the previous marketing year. In the weekly EIA report, weekly ethanol production was reported at 1.068 million barrels per day, compared to 1.016 barrels per day last week. Ethanol stocks were reported at 22.8 million barrels, compared to last week’s stocks at 22.9 million barrels. Ethanol margins are steady with last week at net positive $0.18 cents per gallon.

The International Grains Council revised their 2017/2018 global corn production estimate to 1.048 billion tonnes, reflecting lower crop expectations from Argentina and Brazil. ICG cut Argentina’s corn crop estimate to 46.5 million tonnes from 49.2 million with Brazil down to 87.5 million tonnes from 90.2 million tonnes previously. At the USDA Outlook Conference, the USDA pegged US corn planted area to 90 million acres, down from last year at 90.2 million acres. Corn ending stocks are forecast at 2.272 bb amid yields of 174 bpa and production of 14.39 bb.

Strategy and outlook

As prices rally during the winter months, producers look to sell the carry and lock in basis as it narrows. You can replace ownership with option or futures strategies.

Soybean analysis

Soybeans closed the week $.15 3/4 higher. Last week, private exporters announced sale of 216,000 mts of soybeans to an unknown destination.

Weekly export sales of soybeans showed a total of 4.2 mb (113,000 mt) including cancelations of 4.0 mb (109,100 mt) for the 2017-2018 marketing year. This was a marketing year low. This put total marketing year sales at 1.643 bb, 14 percent less than the previous marketing year. At the USDA Outlook Conference, the USDA said U.S. farmers are estimated to plant 90 million acres of soybeans, down slightly from 90.1 million in the spring of 2017. Yields are forecast at 47.1 bpa and ending stocks are estimated at 460 mb.

The IGC expects global soybean production for the 2017-2018 crop year to fall to 347 million tonnes, due to Argentina’s drought and the yield implications from that. IGC also pegged the 2018/2019 harvest area up 2 percent year on year.

The Rosario Grain Exchange cut their estimate of the Argentine soybean crop to 46.5 mmts from 52.0 mmts previously and corn to 35.0 mmts from 39.9 mmts previously. The USDA currently sits at 54.0 mmts for soybeans and 39.0 mmts for corn.

Strategy and outlook

As prices rally during the winter months, producers look to sell the carry and lock in basis as it narrows. You can replace ownership with option or futures strategies.

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