Requests for gag order to be lifted

Farm and pork groups are denouncing a gag rule forbidding North Carolina hog farmers and their neighbors from discussing litigation against them. Attorneys for those groups have filed amicus curiae briefs in the U.S. Court of Appeals for the Fourth Circuit at Richmond, Virginia, seeking that the gag order be overturned. The American Farm Bureau Federation and North Carolina Farm Bureau along with the National Pork Producers Council and North Carolina Pork Council filed separate briefs August 7. Judge Earl Britt, of the U.S. District Court for the Eastern District of North Carolina, imposed the gag order in late June on the parties, lawyers and potential witnesses in lawsuits brought against Murphy-Brown, the hog production subsidiary of Smithfield Foods. The judge said a “significant increase in trial publicity” and the “volume and scope of prejudicial publicity” about the first two cases-one decided in early May and the other two days after the gag order was implemented-could taint future jurors.

Farmland values on the rise

Nationwide, farmland values rose two percent this past year. The Northern Plains region went the other direction with farmland values down 1.4 percent. In Minnesota, farm real estate values averaged $4,700 per acre, down $50 from last year. Farmland in North Dakota is averaging $1,830 per acre this year, down $10 per from last year. South Dakota farm real estate averaged $2,170 per acre, down $10 from 2017. Cash rents for crop ground in the three states are mostly unchanged from last year.

Earnings up for DowDupont ag division

The DowDuPont agriculture division reports second quarter operating earnings of $1.7 billion, up from $1.2 billion one year ago. Seed sales approached $4 billion, an increase of 35 percent. Crop protection sales rose seven percent to $1.9 billion.

Corteva Agriscience Chief Operating Officer Jim Collins, Jr. cited gains with new corn hybrids and A-series soybeans.

“We delivered nearly 20 percent growth in insecticides with better supplies due to work on the bottle-necking and productivity and new product launches,” Collins said.

DowDuPont will eventually separate into three different companies. The agriculture division, known as Corteva, is expected to be spun off in June of next year. The new leadership team for Corteva Agriscience will be announced next month.

Smithfield Foods faces

penalty

Smithfield Foods is facing a $473 million legal penalty, losing a nuisance lawsuit filed by neighbors of three large-scale hog farms in North Carolina. A federal jury awarded more than $23 million in compensatory damages and $450 million in punitive damages.

While this lawsuit was wrapping up, a national agricultural leaders roundtable meeting was underway in Raleigh, North Carolina. Representatives of the National Pork Producers Council spoke at the event, saying the legal system was being abused and these nuisance lawsuits are a threat to family farmers.

Corn analysis

Corn closed the week $.13 lower. Last week, private exporters an optional origin sale of 179,000 mts to an unknown destination.

Weekly export sales of corn totaled 47.7 mb (1,212,200 mt) as of August 2 with 21.8 mb (554,500 mt) for the 2017-18 season. Total shipments plus outstanding sales in 2017-18 are now 2.359 bb, 6 percent above the previous marketing year. In the weekly crop conditions report, In the weekly crop conditions report; US corn crop conditions declined 1 percent to 71 percent good/excellent versus 71 percent expected, 72 percent last week and 60 percent last year. 38 percent of the corn crop is in the dough stage versus 20 percent last year. In the weekly EIA report, ethanol production showed an increase in production of 36,000 bpd, the second largest single week in history. Ethanol stocks rose 900,000 barrels to the highest level in the last 20 weeks.

In the August supply/demand report, the USDA surprised in trade by increasing the US corn yield to a record 178.4 bpa, well above the average trade estimate of 175.9 mb and larger than last year’s 176.6 bpa and an increase of 4.4 bpa from the July report. This increased US production to 14.586 bb, up 356 million bushels from July. USDA raised exports 125 mb from last report and increasedoverall usage to 14.980 bb. Once again, thanks to a record corn crop, the US will have large enough carryover supplies to cushion the blow of usage outpacing production. Feed/residual usage is higher than a year ago at 5.525 bb versus 5.450 bb last year, ethanol usage is higher than a year ago at 5.625 bb versus 5.60 bb. World ending stocks increased to 193.3 mmts from 191.7 mmts last month and was above the average trade estimate of 190.8 mmts.

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.

Soybean analysis

Soybeans closed the week $.43 1/4 lower. Last week, private exporters 355,000 mts of soybeans to an unknown destination and 135,000 mts of meal to the Philippines.

Weekly export sales of soybeans totaled 35.1 mb (954,300 mt) with 15.5 mb (421,800 mt) for the 2017-18 marketing year. Total shipments plus outstanding sales are now 2.151 bb, 3 percent less than a year ago. In the weekly crop progress and conditions report, US soybean crop conditions lost 3 percent, falling to 67 percent good/excellent versus 69 percent expected, 70 percent last week and 60 percent last year.

Soybeans found a bearish surprise in the monthly supply/demand report as the USDA raised their yield projection 51.6 bpa, 3.1 bpa above last month and well above the average trade guess of around 49.6 bpa. This was also above last year’s 49.1 bpa average.

With the increase in production, the 2018/19 carryout projection swelled to a bearish 785 million bushels, the largest on record. The USDA also surprisingly raised exports by 20 mb to 2.060 bb, below a year ago levels of 2.110 bb. World ending stocks were 95.6 mmts, right in line with average trade estimates and last months figure.

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.