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Weekly market review

By Staff | Nov 26, 2019

Fall out from gravity and the lack of confirmation on the phase one trade deal with China negatively affected grains recently, with the soybean complex leading the way. Rumors last week of China asking for more tariff roll backs they said were included in the agreement were met with comments from the U.S. Administration that nothing had been officially agreed to yet. It seems that any bullish sentiment before the November USDA report has now vaporized. Analysts are looking at correlations between November yield reductions and the historical changes to the final yield report in January.

U.S. corn exports continue to be a major concern to trade. Exports since to beginning of the year stand at 1.426 billion bushels, well below average for this date. Brazilian exports for the year reported at 1.36 billion bushels, which is 60 percent ahead of their previous record pace. Currency rates continue to favor Brazil over the U.S. through January. The USDA decreased exports 50 million bushels in last week’s report, further reductions in upcoming reports would not be surprising.

This week’s ethanol report showed the 7th consecutive week of increased ethanol production. Ethanol stocks have been trailing a year ago, helping to improve margins. Spot margins are estimated to have improved 8 cents per gallon on the week. Analysts are expecting an increase in production in the short term on improved margins and adequate ethanol storage. Stocks are reported 11 percent below last year.

Crop progress released Tuesday afternoon showed soybean harvest at 85 percent, up 10 percent from last week’s but still lagging behind the 5-year average of 92 percent.

Corn harvest was at 66 percent for the week, up 6 percent from the prior week but still behind the 5-year average of 85 percent.

The unharvested corn and soybean acres are starting to get trades attention. The latest progress report indicated that the U.S. had nearly 30 million corn acres yet to harvest. This leaves roughly 4.6 billion bushels of corn to harvest, nearly double a year ago. Unharvested soybean acres were estimated over 11 million, with 530 million bushels remaining in the field. Due to less than favorable harvest conditions, some of these acres may not be harvested until next spring, which typically diminishes yield. The production debate will likely last well beyond the final report in January.

Informa released their 2020 crop estimates this week predicting 94.4 million acres planted to corn in the upcoming year; this would be a 4.4 million acre increase over last year. There is some concern that with this many acres planted combined with trend line yields, there could be a significant increase in the carryout number. Soybean acreage was estimated to be 86.4 million acres; this would be an increase of nearly 10 million acres from last year. The large increase in soybean acres is not a surprise given the amount of prevent plant acres that were seen this past year. There is a lot of time for these numbers to change, and will be something that the market will monitor going forward.

For more information, you may contact Adam Suntken at (712)-454-1061, or e-mail at asuntken@maxyieldcooperative.com. The opinions and views expressed in this commentary are solely those of Adam Suntken. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.

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