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BRIAN HOOPS

By Staff | Nov 14, 2018

Total exhange numbers rise from last year

Minneapolis Grain Exchange (MGEX) reported that the total exchange volume for October came in at 160,100 contracts, which is an increase of 33 percent compared to October 2017. MGEX reached a total volume of 137,793 contracts traded electronically. Options volume was recorded at 2,991 contracts traded. Open interest as of last Wednesday was reported at 84,333 contracts, which is an 19 percent increase from the end of September.

Net sales up for AGCO

AGCO is reporting net third quarter sales of $2.2 billion. Net sales are up 11.5 percent from the same quarter one year ago. Net sale for the first nine months of AGCO’s fiscal year are $6.8 billion. This is 17 percent more than the previous year. AGCO says Precision Planting, purchased in the fourth quarter of 2017, contributed sales of $97 million in the first nine months of 2018.

Third quarter earnings up for Bunge

Bunge, a leader in agribusiness, food and ingredients, fuel and fertilizer, adjusted third quarter earnings totaled $573 million, up from $369 million one year ago. Soybean crush margins were higher, which was a significant factor in this quarterly report.

After two activist investment firms pushed for changes, Bunge has expanded its 11-person board to 15.

Corn analysis

Corn closed the week $.01 3/4 lower. Last week, private exporters announced sale of 101,745 mts of corn to Mexico.

For the week ending November 1, USDA reported 27.6 mb (701,500 mt) of corn export sales for 2018-19 and none for 2019-20.

Total commitments of 887 million bushels in 2018-19 are up 16 percent from a year ago.

In the weekly crop progress report, NASS reported U.S. corn harvest is now 76 percent complete versus 77 percent expected, 63 percent last week, 68 percent last year and 77 percent average.

U.S. ethanol production moved higher again for the week ending 11/02/18 to 1.068 million barrels/day (314 million gallons/week) from 1.059 mbpd (311 mil gal/week) the week prior and was 1.0 percent above last year’s same-week production of 1.057 mbpd.

Crude oil stocks saw an increase of 5.8 million barrels compared to expectations of a 2.0 million barrel increase. The supply/demand report showed bullish production signals as the USDA lowered corn yield to 178.9 bpa, down 1.8 bpa from last month. In other years when USDA lowered production from October to November, a similar yield reduction was seen in the final report in January.

The U.S. corn carryout was lowered to 1.736 billion bushels in relation to the decrease in yield. However, world carryout nearly doubled from Chinese revisions starting back in 2007/08. The new corn world carryout is now 307.51 mmt, up 148.16 mmt from the October WASDE report. Even with an expected further reduction in yield, RJ O’Brien has projected 2018/19 U.S. corn carryover at 1.778 bb, 42 mb above the current USDA forecast. RJO has also forecasted 2019/20 carryout at 2.20 bb, 600 mb over USDA’s Baseline forecast amid higher corn area and lower exports/feed use than WASDE.

Soybeans analysis

Soybeans closed the week $.00 3/4 lower. Last week, private exporters did not announce any private sales.

USDA reported 14.3 mb (388,400 mt) of weekly soybean export sales for 2018-19 and 100,000 bushels (3,000 mt) for 2019-20. Total commitments of 802 mb in 2018-19 are down 31 percent from a year ago.

In the weekly crop progress and conditions report, U.S. soybean harvest advanced to 83 percent complete versus 84 percent expected, 72 percent last week, 89 percent last year and 89 percent average.

In the WASDE report, U.S. soybean yield was changed to 52.1 bpa, down 1 bpa as cool and wet weather has affected the crop condition this past month. Exports were finally cut from 2.060 bb to 1.900 bb, down 160 million bushels.

This resulted the U.S. soybean carryout to jump up 70 million bushels to 955 million bushels. Look for further export reductions, unless an agreement is signed with China very soon as weekly exports would need to average approximately 26.5 mb per week to reach this forecast, an all time record. RJO has lowered their 2018/19 soybean export forecast by 30 mb below USDA which propels 2018/19 U.S. soybean stocks to 1.0 bb, 45 mb above USDA. RJO has lowered 2019 U.S. soybean planted area by 8 million acres, suggesting ending stocks would fall to 866 mb, still historically large.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months and use options to re-own.

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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