The Senate Appropriations Committee has approved the agriculture spending bill.
The bill maintains support for crop insurance and other farm bill programs. It fully funds the expected demand for Farm Service Agency direct and guaranteed loan programs.
There is language preventing USDA from closing county FSA offices and provides money for additional FSA loan officers. There’s $8.7 million for the U.S. Wheat and Barley Scab Initiative and research dollars for sugar beets, small grains, pulse crops and more.
Corn closed the week $.15 3/4 lower. Last week, private exporters announced sale of 231,248 mts of corn to an unknown destination.
Weekly export sales of corn showed a total of 45.0 mb (1,142,400 mt) with 39.1 mb (993,100 mt) for the 2017 -2018 marketing year. This put total marketing year sales at 2.144 bb, 1 percent above the previous marketing year.
In the weekly crop progress report, NASS reported U.S. corn crop conditions at 79 percent good/excellent versus 72 percent expected versus 65 percent last year.
This year’s corn crop is tied for 2nd best initial rating in 27 years.
U.S. corn planting is 92 percent complete versus 93 percent expected, 81 percent last week, 90 percent last year and 90 percent average.
In the weekly EIA report, Ethanol production increased by 13,000 barrels/day from last week to 1.041 million b/d, up 2.1 percent from a year ago and in line with USDA projected pace. Ethanol stocks fell 36 million gallons to 893 million, 6.6 percent below last year.
During June, the outlook for prices depends on weather and how it impacts the emerging crops. The only other supply side news the market will deal with is the June 12 USDA monthly supply/demand crop report.
The trade will want to be bullish as the key pollination time period is directly ahead of the market, however, it will take weather concerns during June to ignite a rally. Producers will want to use options as a way to manage risk and provide price insurance. This will enable producers to make sales and cover the upside if weather is adverse. The end of the month will also have the quarterly stocks and planting intentions report from the USDA. This report could be a shocker to the market as some reports have farmers decreasing seeded acres from the last report in March due to some late seeding in the upper Midwest. Seasonal highs are usually formed by June 23.
Strategy and outlook
Producers should have either made sales and re-owned with call options or buy puts to establish a price floor.
Soybeans closed the week $.17 3/4 lower. Last week, private exporters did not report any private sales.
Weekly export sales of soybeans showed a total of 38.4 mb (1,045,000 mt) with 10.0 mb (273,400 mt) for the 2017-2018 marketing year. This put total marketing year sales at 2.038 bb, 5 percent less than the previous marketing year. In the weekly crop progress and conditions report, U.S. soybean planting is 77 percent complete versus 73 percent expected, 56 percent last week, 65 percent last year, 62 percent average. The month of June looks to be similar to corn as we are in a weather market and weather forecasts will be the primary driving force.
The crop looks to be seeded before June 15 leaving beans to spend the rest of June developing its root system. Rains after June 15 will be viewed as beneficial to crop development and negative for prices. However, dryness in the month of June will send prices sharply higher.
Like the corn market, producers should use options as a risk management tool and price insurance. The month of June is not the key reproductive month for soybeans, however, the market will be quick to add a premium into prices on less than ideal weather.
The acreage report at the end of the month could be a shocker to the trade as additional soybean acres are likely to be seeded. Seasonal highs are usually formed by June 23.
Strategy and outlook
Producers should have been making 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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