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Midwest Marketing Solutions

By Staff | Feb 22, 2019

Implementing the new farm bill

With a new farm bill, lawmakers and the USDA are focused on implementation. Deputy Agriculture Secretary Steve Censky told attendees at the Farm Foundation Forum the USDA has charged each of the mission areas to hold a listening session.

“We do want to hear from the various stakeholders. We’re going to be putting together a calendar of those listening sessions,” said Censky. “We’ll be sharing that widely so folks know when those are in can be attending.”

Censky is in charge of implementing the farm bill at USDA and says it will be important to move quickly. Senate Agriculture Committee Chairman Pat Roberts and House Agriculture Committee Chairman Collin Peterson both say they will work with the USDA to implement the new farm bill.

AGCO fourth quarter net sales

AGCO reports fourth quarter net sales of $2.6 billion, an increase of 2.6 percent from last year’s fourth quarter. Full year net sales are reported at $9.4 billion, an increase of 12.6 percent from 2017. Full year expenses are reported at $7.4 billion, resulting in 2018 profits of nearly $2 billion. AGCO CEO Martin Richenhagen says North American sales improved 16.2 percent with North American business income is up $36.2 million from the previous year.

ADM has strong quarterly performance

Archer Daniels Midland is reporting fourth quarter adjusted operating profits of $860 million. ADM Chairman and CEO Juan Luciano says the strong quarterly performance lead to a 26 percent year-over-year earnings increase.

“There’s an adjusted segment operating profit of $3.4 billion, 26 percent higher than 2017,” says Luciano. “There is also strong operating cash flows, up more than 40 percent.”

ADM Chief Financial Officer Ray Young said ADM had an impressive fourth quarter, even with market challenges.

“North American results benefit from weak basis gains and solid execution that drove improvements in export margins in comparable year over-year-volumes,” says Young. “The team did an excellent job offsetting significantly reduced exports to China by driving North American exports of corn and soybean exports to markets outside of China.”

Corn analysis

Corn closed the week 1/2-cent higher. Last week, private exporters announced sales of 328,120 mts to unknown destinations.

U.S. corn exports, for the week ended 2/07/19, were disappointing at just 29.3 million bushels, coming in below market expectations of 33.5-45.3 million bushels and down from last week’s 35.5 mb and were the lowest in five weeks.

This was also the 3rd lowest of the 23 weeks so far in the 2018/19 marketing year. More importantly, it is below the roughly 45.6 million bushels/week corn will need to average through the end of August in order to reach the USDA’s 2.450 billion bushel export projection.

In the weekly EIA report; U.S. ethanol production, for the week ended 2/08/19, rebounded strongly to 1.029 million barrels/day (303 million gallons/week) from the previous week’s historic plunge to just 967,000 bpd (284 million gallons/week). U.S. ethanol stocks last week slipped to 986 million gallons (23.466 million barrels) from 1.006 billion gallons (23.947 mil barrels) the week prior and reflected the lowest stocks in four weeks.

Crude oil stocks increased 3.6 mb vs. expected increase of 2.4 mb. Informa estimated the 2019 corn plantings at 91.591 million acres. This compares to their previous estimate of 91.504 million acres. Last year’s acreage was at 89.1 million acres.

Strategy and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don’t store unpriced crop.

Soybeans analysis

Soybeans closed the week $.08 3/4 lower. Last week, private exporters announced sales of 120,000 mts of soybean meal to Ecuador.

U.S. soybean exports last week were 39.1 million bushels, little-changed from the previous week’s 40.1 mb. However, weekly shipments were, once again, below last year’s same-week exports of 49.2 million bushels. Exports need to average roughly 33.4 million bushels/week over the remaining 29 weeks of the 2018/19 marketing year in order to reach the USDA’s recently lowered 1.875 billion bushel export projection.

The January NOPA Crush Report was reported at 171.6 mb (largest January crush on record) versus 169.6 mb expected, 163.1 last January and 171.8 mb in December. Informa estimated the 2019 U.S. soybean acreage at 86.044 million acres.This compares to their previous estimate of 86.204 million. The 2018 soybean acreage was estimated at 89.2 million acres.

Stragey and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don’t store unpriced crops.

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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