Midwest Marketing Solutions
November at the Minneapolis Grain Exchange
MGEX welcomes November 2019 into the record book as the 20th best overall month with a total of 234,265 contracts traded. Furthermore, this past month was the 18th best electronic month at the Exchange with a total of 206,904 contracts traded.
Total futures volume came in at 231,185 contracts, while total options volume was at 3,080 contracts traded.
Gross income down for Deere and Company
Deere and Company is reporting fiscal year 2019 fourth quarter earnings of $722 million on gross income of $9.9 billion. That’s down eight percent from the fourth quarter of 2018. Fiscal year 2019 full year net income is reported at $3.3 billion, a five percent increase year-over-year. Net sales of equipment operations for the year are reported at $35 billion, also up five percent year-over-year.
Net sales for Deere’s Agriculture and Turf division is up two percent to $23.7 billion.
Corn closed the week $.04 1/2 lower. Last week, private exporters announced sale of 245,872 mts of corn to Mexico for 2019/20.
In the weekly crop progress and conditions report; U.S. corn harvest advanced to 89 percent complete versus 89 percent expected, 84 percent last week, 97 percent last year and 98 percent average.
North Dakota is only 36 percent complete versus 95 percent average.
U.S. corn inspections were a paltry 16.9 million bushels and were a 4-week low.
Cumulative exports of 238 million bushels are down 58 percent from last year’s 560 million and are the 2nd lowest in more than 40 years for late November.
Corn exports will need to average roughly 37.7 million bushels/week through the end of next August in order for the USDA’s 1.850 billion bushel export projection to be reached versus last year’s 33.2 million/week.
The USDA supply/demand report on December 10 looks to lend little direction to prices, with no production adjustment and the USDA likely to lower demand forecasts by 15 to 25 million bushels. The most bullish driving force for prices would be if the funds decide to become buyers with very little farmer hedge pressure until after the first of the year.
Stragegy and outlook
Stocks look to remain large with the poor demand pace. Commercial buying has lifted the index to a bullish position. Look for long term support to be tested before a significant rally develops.
Soybeans closed the week $.12 1/2 higher. Last week, private exporters announced sale of 245,000 mts of soybeans to an unknown destination with 120,000 mts for 2019/20 and 125,000 mts for 2020/21. Exporters also announced sale of 20,000 mts of bean oil to Morocco.
In the weekly crop progress report, U.S. soybean harvest is now 96 percent complete versus 97 percent expected, 94 percent last week, 97 percent last year and 99 percent average.
U.S. soybean inspections were solid at 56.9 million bushels.
Cumulative export inspections of 586 million bushels are up 20 percent from last year’s 487 million at this time. Soybean exports will need to average roughly 29.1 million bushels/week over the remainder of the marketing year in order to reach the USDA’s 1.775 billion bushel export projection versus last year’s 30.5 million/week average from this point forward.
USDA reported U.S.-wide soybean crush in October was 187.2 million bushels, slightly above the average trade estimate of 186.1 million, up from September crush of 162.3 million and 2.0 percent above last year’s October crush of 183.6 million bushels.
Moreover, in exceeding December 2018 crush of 183.8 million bushels, October set a new all-time record. Brazil and Argentina store little to no excess grain, as storage elevators are absent from the countryside, not like here in the U.S. Grain goes from field to port, which means they need to forward contract, or pre-sell their crop before it’s harvested to insure it doesn’t pile up on the farm.
From the start of the U.S. harvest in October until South American soybean harvest in March, the big demand window for U.S. soybeans as South American supplies are unavailable and the U.S. is the only port of origin for the world’s needs.
Strategy and outlook
Futures bounced off long term support with strong end user buying supporting values. Another test of this support should prove to be a strong buying opportunity.
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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