Steer and heifer processor agrees to make payments

After a hearing in federal court, Sam Kane Beef Processors LLC agreed to promptly repay nearly $38 million in payments owed to livestock sellers. The Packers and Stockyards Act requires payment of livestock purchases by the next business day.

The company has 18 months to make those late payments. Sam Kane is a fed steer and heifer processor in Corpus Christi.

The agreement comes after two complaints were filed against the processor for allegedly violating the Packers and Stockyards Act, saying the company failed to meet the timeframe for payments. Both complaints allege that of June 8, 2018, the company was 38-days late on some payments, with a few at up to 60 days late. If the company fails to make the payments as agreed, the court will appoint a receiver to manage Sam Kane financial affairs according the Department of Justice. A USDA-filed complaint said Sam Kane failed to pay the full purchase price for livestock within the time period required by the Packers and Stockyards Act on numerous occasions, going back to January of 2017. The Packers and Stockyards Act authorizes civil penalties of up to $11,000.

Hormel, Tyson Foods face lawsuit

A class action lawsuit is accusing Hormel, Tyson Foods and other meatpacking companies of falsely raising the price of pork products with the help of the information-sharing service Agri Stats.

Filed in a Minnesota court, the complaint accuses the meat packers of exchanging detailed and sensitive non-public information. Meat buyers claim that prices were boosted by more than 50 percent. Hormel Foods issued a statement saying they are confident that theseallegations are without merit and intend to defend this lawsuit.

Cattle theif sentanced

A Hazen, North Dakota man was sentenced to 30 days at the Heart of America Correctional Facility in Rugby and paid nearly $15,000 in restitution for cattle theft.

Northeast District Court Judge Michael P. Hurly sentenced Dwight Todd Mehrer after a plea agreement was reached in a McHenry County. Mehrer was charged with selling unbranded cattle owned by his deceased girlfriend under another party’s name and keeping the proceeds for himself.

Corn analysis

Corn closed the week $.07 1/4 higher. Last week, private exporters announced sale of 270,000 mts to an unknown destination.

Weekly export sales of corn totaled 42.8 mb (1,086,000 mt) as of July 19 with 13.3 mb (391,200 mt) for the 2017-18 season. Total shipments plus outstanding sales in 2017-18 are now 2.326 bb, 5 percent above the previous marketing year. In the weekly crop conditions report; U.S. corn crop conditions were unchanged at 72 percent good/excellent versus 71 percent expected, 72 percent last week and 62 percent last year.

In the weekly EIA report, U.S. ethanol production rose to 1.074 million barrels/day (316 million gallons/week) from 1.064 mbpd (313 mil gal/week) the week prior, reflecting a solid 6.1 percent increase and the largest single weekly production in 30 years.

Crude stocks saw a decline of 6.15 million barrels versus estimates of a drawdown of 2.30 mb. Crop ratings are one of the highest rated crop in the last 15 years, leaving the trade to believe a monster crop will be harvested this fall. Crop ratings historically decline in August under warmer and drier conditions. In August, watch the weather forecasts closely. If weather would turn hot and dry in the final kernel filling stage, we would have one final rally this summer.

Weather must turn adverse before August 25th as after this date, our key yield development time will be over.

Strategy and outlook

Typical rallies in late summer are 30 to 50 cents, which would be an excellent opportunity to make additional catch up sales if given the opportunity on production that can not be stored at harvest.

Soybeans analysis

Soybeans closed the week $.19 1/4 higher. Last week, private exporters announced sale of 154,10 mts of soybeans to an unknown destination.

Weekly export sales of soybeans totaled 55.2 mb (1,501,900 mt) with 19.8 mb (538,100 mt) for the 2017-18 marketing year. Total shipments plus outstanding sales are now 2.138 bb, 4 percent less than a year ago. In the weekly crop progress and conditions report, U.S. soybean crop conditions improved to 70 percent good/excellent versus 68 percent expected, 69 percent last week and 57 percent last year.

By August 20th to the 30th soybeans will have completely filled the pod, and seasonal highs will be in. It is in this time frame that we will either produce a monster crop or a crop that does not meet expectations. Beans need moisture in the pod setting stage to achieve normal yields however, hot and dry conditions will force moisture to the root system, leaving the bean in the pod to develop small. The soyoil content is what suffers most, leaving bean oil undervalued if hot and dry conditions set in across the Midwest.

Strategy and outlook

Typical rallies in late summer are 30 to 50 cents, which would be an excellent opportunity to make additional catch up sales if given the opportunity on production that can not be stored at harvest.

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.