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BRIAN HOOPS

By Staff | Apr 19, 2018

DTN’s Agriculture Confidence Index finds farmers are becoming more positive regarding current agriculture situations and the future.

The index reached the third highest level ever recorded at 134.8. That’s up almost 22 points from the December/January level and slightly above the overall level in spring 2017. Index levels above 100 are considered optimistic, those less than 100 are viewed as a pessimistic attitude.

The optimism comes as farmers continue dealing with lower commodity prices, large crop estimates and trade worries.

Corn analysis

Corn closed the week one cent lower. Last week, private exporters did not announce any private sales.

Weekly export sales of corn showed a total of 35.3 mb (895,900 mt) with 33.1 mb (839,900 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.897 bb, 2 percent less than the previous marketing year.

The first U.S. corn planting report of the year showed corn is 2 percent complete, as expected and versus 3 percent last year and 2 percent average.

In the monthly supply/demand report, the USDA raised the 2017-18 corn ending stocks by 55 mb and lowered domestic use by a like amount. Forecasted ending stocks for 2017-18 sit at 2.182 bb with current stocks to use at 14.8 percent. In the weekly EIA report, weekly ethanol production was reported at 1.034 million barrels per day, down 4,000 barrels per day. Stocks were down 600,000 barrels at 21.8 million barrels. Crude oil stocks rose modestly versus ideas of a minor decline.

Midwest U.S. producers will begin to seed corn acres by mid- April and weather will become very important to pricing by May.

If the month of April is wet and hampers producers planting efforts, look for December corn to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Strategy and outlook

As producers get planters out of their sheds and begin seeding the 2018 crop, look to either make sales and reown with call options or buy puts to establish a price floor.

Soybeans analysis

Soybeans closed the week $.17 1/2 higher. Last week, private exporters announced sales of 511,500 mts of beans to an unknown destination; 132,000 mts of soybeans to China; 141,518 mts of beans to Mexico and 240,000 mts of soybeans to Argentina.

Weekly export sales of soybeans showed a total of 90.6 mb (2,464,500 mt) with 55.5 mb (1,510,500 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.947 bb, 4 percent less than the previous marketing year. In the monthly supply/demand report, the USDA raised the soybean crush 10 mb and raised usage by 5 mb, resulting in a lower ending stocks number. Projected ending stocks for 2017-18 sit at 550 mb, 25 mb less than trade expectations with current stocks to use at 13.2 percent.

The USDA lowered the Argentine bean crop 7.0 mmt to 40.0 mmt and raised the Brazilian bean crop 2.0 mmt to 115.0 mmt. In April, soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans. Also, a planting season that is slowed by heavy rains, will encourage farmers to switch plantings of corn over to soybeans, therefore look for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks.

Strategy and outlook

As producers get planters out of their sheds and begin seeding the 2018 crop, look to either make sales and reown with call options or buy puts to establish a price floor.

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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