Smithfield to sell ham products to the federal government

A Chinese-owned pork producer will sell at least $240,000 worth of ham products to the federal government as part of the Trump administration’s farm bailout program, the administration said.

U.S. pork producer Smithfield, which is owned by the Chinese conglomerate WH Group, will sell 144,000 pounds of ham products to the federal government under the contract. The Agriculture Department is purchasing pork and other commodities from U.S. farmers to help offset the damage from retaliatory tariffs imposed by China this summer. The administration has pitched the relief as a necessary short-term measure to help farmers weather the trade battle.

U.S. pork volume down

U.S. Pork Exports continue to be impacted by retaliatory tariffs in China and Mexico. That’s according to the U.S. Meat Export Federation. In September, U.S. pork export volume was down 2 percent from a year ago to just over 179,000 metric tons.

According to USDA, export value fell 7 percent to $470 million. September exports accounted for 24.8 percent of total pork production, up from 23.6 percent a year ago. For January through September, combined pork and pork variety meat exports were 1 percent above last year’s record pace at 1.81 million metric tons. Value was 2 percent higher at $4.79 billion.

U.S. beef exports strong

According to the U.S. Meat Export Federation, U.S. beef exports remained very strong in September. Data released by USDA reports September beef exports totaled 110,160 metric tons, up 6 percent from a year ago. Those exports were valued at $687 million, up 11 percent. In September, those exports accounted for 13.7 percent of total beef production. For January through September, beef exports were just over 1 million metric tons. That’s up 9 percent from a year ago, while value surged 18 percent to $6.2 billion.

Corn analysis

Corn closed the week $.04 1/2 lower. Last week, private exporters announced sale of 212,000 mts of corn to Mexico.

For the week ending November 8, USDA reported 35.1 mb (892,500 mt) of corn export sales for 2018-19 and 100,000 bushels (1,400 mt) for 2019-20. Total commitments of 922 million bushels in 2018-19 are up 15 percent from a year ago.

In the weekly crop progress and conditions report; U.S. corn harvest advanced to 84 percent complete versus 87 percent expected, 76 percent last week, 81 percent last year and 87 percent average.

In the weekly EIA report, crude oil stocks showed a 10.27 mb increase from prior week to 442.06 mb, well above the average trade estimate that called for a 3.20 mb increase.

Ethanol production averaged 1,067k bpd versus 1,068k the prior week. Ethanol stocks rose 364,000 barrels to 23.5 million barrels. Demand needs improve for corn to have any chance of a meaningful rally. The U.S. window for opportunity to export corn ends in the spring with a larger Ukraine and South America corn crop competing for world market share.

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 and manage risk.

Soybeans analysis

Soybeans closed the week $.06 1/2 higher. Last week, private exporters announced sales of 524,732 mts of beans to an unknown destination.

USDA reported 17.3 mb (470,400 mt) of weekly soybean export sales for 2018-19 and a slight amount (500 mt) for 2019-20.

Total commitments of 817 mb in 2018-19 are down 32 percent from a year ago. In the weekly crop progress and conditions report, the U.S. soybean harvest is now 88 percent complete versus 91 percent expected, 83 percent last week, 93 percent last year and 93 percent average.

U.S. soybean sales to China so far this marketing year is 3 percent of the total. Last year it was 41 percent.

The NOPA crush report saw 172.3 million bushels of soybeans crushed in October, above average market expectations of 170.0 million, sharply rising from September NOPA crush of 160.8 million bushels and significantly surpassing last year’s 164.2 million bushels. Additionally, not only did last month’s crush beat the previous October record of 164.6 million bushels in 2016, but also the all-time record monthly crush of 171.9 million bushels set in March 2018.

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 and manage risk.

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.