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Midwest Marketing Solutions

By Staff | Mar 7, 2019

Estimate of damage in cattle deaths given

Officials say the more than 1,800 dairy cows that died in a blizzard in southern Washington state earlier this month were a nearly $4 million loss, not including the lost milk production. Farm Service Agency program specialist Gerri Richter tells the Capital Press that seven dairy farms have given notices of loss to the agency’s office in Yakima, and more are expected to report soon.

U.S. commercial beef production expected to increase

U.S. meat production is projected to break new records this year. Commercial beef production for 2019 is forecast to increase three percent to 27.6 billion pounds. That would break the previous record set in 2002. Commercial pork production is projected to reach a record 27.3 billion pounds, up four percent from last year. Turkey production is forecast to reach 5.9 billion pounds, after declining in 2018. For the first time in six years, dairy cow numbers are below a year earlier. Numbers are expected to see very small declines again in 2019, due to poor margins.

Bunge reports loss

Bunge is reporting a quarterly loss of $65 million. That compares to a loss of $60 million one year ago. Soybean processing margins improved, but Bunge was not able to capitalize on those gains due to mistakes made in risk management. Former Gavilon Group executive Greg Heckman has been named Bunge’s acting CEO, succeeding former chief executive officer Soren Schroder.

Becraft and Diekman sentenced

Jail time is coming for two of the individuals involved in one of the biggest farm bankruptcies in U.S. history. James Becraft Jr. and Douglas Diekman pleaded guilty to conspiracy to make false statements on crop insurance forms. The pair will each serve about a year in jail and will collectively pay the Risk Management Agency and Farm Service Agency over $1 million in restitution. This case involves the Stamp Farms at Decatur, Michigan. The farm grew rapidly, often paying above market rates to rent farm ground. False information was allegedly provided to lenders and the federal crop insurance program. This farm was eventually sold off to Boerson Farms of Zeeland, Michigan, which ran into its own financial problems and defaulted on millions of dollars in loans to CHS Capital.

Corn analysis

Corn closed the week $.12 1/2 lower. Last week, private exporters announced sales of 447,400 corn to Mexico and 133,000 mts of corn to South Korea.

U.S. corn exports were only 29.6 million bushels, down from 37.1 million bushels the previous week and were substantially below last year’s same-week exports of 51.8 million bushels. Corn exports will need to average 46.5 million bushel/week to reach the USDA’s 2.450 billion bushel export projection. Last year’s pace was a record 58.0 million/week average and the need pace would be the second highest on record.

U.S. ethanol production, for the week ended 2/22/19, rebounded solidly to 1.028 million barrels/day (302 million gallons/week) from the previous week’s notable decline to 996k bpd (293 mil gal/week), but was still 1.5 percent below last year’s same-week production of 1.044 mbpd (307 mil gal/week). U.S. ethanol stocks last week slipped to 996 million gallons (23.709 million barrels) from 1.004 billion gallons (23.913 mil barrels) the week prior, but remain record large on a same-week basis and are up 3.2 percent from last year’s 965 million gallons at this time.

U.S. commercial crude oil inventories fell 8.7 million barrels last week to 445.9 million. This is still 5.3 percent above last years level for the same week.

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 $.12 3/4 lower. Last week, private exporters announced sale of 120,000 mts soybeans to Mexico.

U.S. soybean exports were strong at 48.0 million bushels, due in large part to loadings to China, which accounted for 27.3 million bushels of the total. This week’s soybean exports were a 15-week high. Cumulative exports of 920 million bushels are down nearly 34 percent from last year, shipments will need to average roughly 32-33 million bushels/week to all destinations through the end of August vs last year’s 25.2 million/week from this point forward.

The timing of additional Chinese purchases of U.S. soybeans will be critical in whether the USDA’s annual projection is met or not. South American crops have appeared to stabilize and the Brazilian and Argentine soy crop sizes combined should equate to near 172 mmts versus 158.6 mmts last year.

U.S. demand is expected to slow given the availability of the South American crops.

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 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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