Midwest Marketing Solutions
Report states farmers are pessimistic
The September CME Group/Ag Economy Barometer reads 121, a three-point decline from August.
According to the report, farmers are pessimistic about current farm conditions, but more optimistic about the future.
The Center for Commercial Agriculture Associate Director Michael Langemeier says this is a typical pattern. It’s also been a roller coaster summer for farmers because of all of the prevented planting and issues related to getting crops in the ground.
“This has been a train wreck for some people. The farmers are saying that 2020 has to look better than 2019. I think that’s part of it, but also thinking we’re going to get out of this trade situation with China to improve prices,” he said.
Corn closed the week $.13 1/4 higher. Last week, private exporters did not announce any private sales.
In the weekly export inspections report; U.S. corn exports were only 18.4 million bushels and continue to run sharply below year ago exports. Through the first five weeks of 2019/20, cumulative exports are just 80 million bushels, 66 percent below last year’s 233 million bushels at this time, averaging 17.0 million bushels/week vs last year’s 47.3 million/week average through early October.
Based on the USDA’s 2.050 billion bushel export projection, corn exports will need to average roughly 39 million bushels/week over the marketing year versus last year’s 34.5 million/week average from this point forward. In the weekly crop progress and conditions report; U.S. corn conditions were 56 percent good/excellent versus 57 percent expected, down 1 percent from 57 percent last week and well below 68 percent last year. U.S. corn harvest is only 15 percent complete versus 19 percent expected, 11 percent last week, 33 percent last year and 27 percent average.
In the monthly supply/demand report; the trade was was expecting a bullish report but instead was stymied by a neutral production figure and negative demand news. Corn’s lone bullish possibility is production and with the USDA increasing yields, that was enough to hurt priced. The report raised yields from 168.2 bushel per acre to 168.4 bushels per acre but slightly lower harvested acres of 81.8 million led to a lower production of 13.779 billion bushels versus 13.799 billion bushels last month.
The trade was looking for a signficant cut of 1.4 bushels per acre and lower production of 13.591 billion bushels.
Ending stocks came in at 1.929 billion bushels, down from 2.190 billion bushels last month but well above the average estimate of 1.689 billion bushels by the trade prior to the report. From a demand perspective, while feed and residual were raised by 125 million bushels, ethanol was lowered 50 million bushels and exports were lowered 150 million bushels to account for the changes in the ending stocks.
Strategy and outlook
Look to sell inventory at resistance and retracement levels.
Soybeans closed the week $.18 1/4 higher. Last week, private exporters announced sales totaling 836,000 mts of soybeans to China.
In the weekly export inspections report, U.S. soybean exports were 38.2 million bushels and were little-changed from the previous week’s 36.2 million bushels, but were well above last year’s same-week exports of 22.4 million bushels.
Cumulative exports of 154 million bushels are up 17 percent from last year’s 132 million at this time, leaving exports needing to average roughly 33.4 million bushels/week in order to reach the USDA’s 1.775 billion bushel export projection.
U.S. soybean conditions are 53 percent good/excellent versus 55 percent expected, down 2 percent from 55 percent last week and well below 68 percent last year. This is the lowest conditions of the year.
U.S. soybean harvest is only 14 percent complete versus 15 percent expected, 7 percent last week, 31 percent last year and 34 percent average.
In the monthly supply/demand report; the USDA showed a slight reduction in planted/harvested acres from 75.9 to 75.6 million and and a 1.0 bushel drop in yield from 47.9 bpa to 46.9 bpa. This lowered overall production to 3.550 billion bushels from 3.633 billion bushels last month.
From a demand perspective, crush was raised 5 million bushels and exports were left unchanged. This lowered the carryout to 460 million bushels from 640 million bushels last month. This would still be the second largest carryout in history but a far cry from the 1 billion plus bushels that were thought possible earlier this spring.
Commercials continue to sell into the market, major resistance is at $9.95 on the weekly charts.
Strategy and outlook
The U.S. and China has reached a preliminary trade agreement. Use any strength from the agreement to make cash sales.
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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