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Midwest Marketing Solutions

By Staff | Aug 6, 2019

Preventive Planting acres

USDA Risk Management official, based on weekly pace of Preventive Plant (PP) reporting, says 2019 U.S. PP area would reach 15-20 million acres (far higher than earlier estimates). Market reaction thus far muted given reluctance of trade to embrace non-NASS updates and uncertainty over how many PP acres are already incorporated into USDA estimates.

Market Facilitation Program

USDA announced Market Facilitation Program (MFP) initial numbers will have county ranges from $15 to $150 an acre; farmers can receive minimum $15 or 50 percent of payments starting in mid-August. Anything above $15 will be paid out at a later date if deemed necessary.

China approves purchase

Bloomberg reported that the Chinese government approved the purchase of up to 3 million metric tons of U.S. soybeans by five Chinese companies with a waiver of the 25 percent import tariff. The report said that there could be further purchases of U.S. soybeans depending on how the trade talks progress.

Corn analysis

Corn closed the week $.18 lower. Last week, private exporters did not report any export sales.

In the weekly export inspections report; weekly corn export inspections at 17.2 million bushels (mb) were the secibd lowest of the 2018/19 marketing year and were well below the average “needed” pace necessary to reach the USDA’s annual export projection.

In the weekly crop progress and conditions report; U.S. corn conditions were down 1 percent from the week prior at 57 percent good/excellent versus 58 percent expected, 58 percent last week and 72 percent last year.

Notable states included Iowa improving 1 percent to 63 percent good/excellent; Nebraska up 1 percent to 77 percent; Missouri up 1 percent to 33 percent; Illinois up 1 percent to 43 percent; while Indiana lost 4 percent to 35 percent and Minnesota lost 1 percent to 57 percent good/excellent. 35 percent of the crop is silking versus 66 percent normally.

The August supply/demand report promises to be a major market mover. With growing conditions improving, the report will need to be bullish to ignite additional buying interest. The report is expected to show more accurate farmers planted acres than the June acreage report.

Strategy and outlook

Producers should use more option strategies this year than in previous years to provide greater marketing flexibility.

Soybeans analysis

Soybeans closed the week $.20 lower. Last week, private exporters reported a cancelation of 100,000 mts of soybeans previously sold to an unknown destination.

In the weekly export inspections report; Soybean exports of 20.6 mb were also below the average “needed” pace and were the lowest in seven weeks as only 249,000 mts were loaded for shipment to China this week.

U.S. soybean conditions were unchanged from the week prior at 54 percent good/excellent versus 54 percent expected, 54 percent last week and 70 percent last year.

Notable states saw Iowa improve 1 percent to 64 percent good/excellent; Illinois up 4 percent to 45 percent; Nebraska up 2 percent to 73 percent while Missouri is unchanged at 41 percent and Minnesota is also unchanged at 60 percent. Indiana was 2 percent lower at 36 percent good/excellent. 40 percent of the crop is in the bloom stage while only 7 percent of the crop is setting pods.

With over 70 percent of the crop planted in the month of June, lower than normal soybean yields are likely this year. Weather in August will determine longer term yields and price direction for the soybean market.

Strategy and outlook

Large carryover stocks gives the market some cushion in case of lower yields but August is the most important month for soybean production.

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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