Midwest Marketing Solutions
JR Simplot Company to acquire Pinnacle Agriculture Holdings
JR Simplot Company has agreed to acquire Pinnacle Agriculture Holdings. The merger growers Simplot to more than 200 locations across North America, including 2,700 employees and 500 crop advisors. According to a Simplot press release, the target acquisition date is in early 2020.
Tyson Fresh Meats in Holcomb, Kansas back in operation
Tyson Fresh Meats has started processing cattle at Holcomb, Kansas; for the 1st time since the Aug. 9 plant fire. USDA slaughter estimates suggest the plant is running at about 33 to 50 percent of weekday capacity right now or 2,000 to 3,000 head per day.
The U.S. and China reached a historic Phase 1 Trade Agreement that could prove to be a boon for U.S. agriculture.
The agreement is expected to be signed in early January, 2020 and China purchases of U.S. goods and services are likely to follow 30-45 days thereafter. China has pledged to secure $200 billion of U.S. goods and services each year including $40 billion of U.S. ag goods annually for the next two years as part of the agreement.
Corn closed the week $.04 1/2 higher. Last week, private exporters announced sale of 1,600,200 mts of corn to Mexico for 2019/20 and 110,744 mts of corn to an unknown destination.
In the weekly crop progress report; corn harvest is 92 percent complete versus 94 percent expected, 89 percent last week, 100 percent last year and 100 percent average.
North Dakota is 43 percent complete with Wisconsin and Michigan both 74 percent finished.
U.S. corn exports last week were weak again at 18.9 million bushels and were less than half of the roughly 38.1 million bushels/week corn exports will need to average through the end of August in order to reach the USDA’s 1.850 billion bushel export projection.
Cumulative exports of 257 million bushels remain down 57 percent from last year’s 595 million at this time.
Corn stocks in the U.S. came in at 1.910 billion bushels (bb), unchanged from November.
Corn production in Brazil is 101.0 million metric tons (mmts) and in Argentina 50 mmts.
Soybean production in Brazil is 123.0 mmts while Argentine soybean production is estimated at 53.0 mmts.
World ending stocks for corn was estimated at 300.6 mmts up from last month’s 296.0 mmts.
In the weekly EIA report; the rebound in U.S. ethanol production continued, jumping to 1.072 million barrels/day (315 million gallons/week) from 1.060 mbpd (312 mil gal/week) a week prior, marking the 11 consecutive weekly increase and hitting the highest level in 23 weeks. Ethanol stocks finally posted a solid increase last week, jumping to 916 million gallons (21.815 mil barrels) from 867 million gallons (20.639 mil barrels) the week prior, reflecting the largest single-week stocks increase in 23 weeks and the highest stocks in five weeks.
Strategy and outlook
The bullish weekly reversal should end the fund selling that drove prices near contract lows. The new trade agreement will limit the downside risk for prices with the markets slowly rallying as fresh demand becomes apparent.
Soybeans closed the week $.17 3/4 higher. Last week, private exporters announced sale of 585,0000 mts of soybeans to China and 140,000 mts of soybeans to an unknown destination.
In the weekly export inspections report; U.S. soybean exports, for the week ended 12/05/19, were solid at 48.8 million bushels. Cumulative exports of 636 million bushels are now up 22 percent from last year’s 521 million, leaving exports needing to average roughly 28.5 million bushels/week through the end of August to reach the USDA’s 1.775 billion bushel export projection versus last year’s 30.4 million/week average from this point forward.
U.S. soybean ending stocks was 475 million bushels compared to November at 475 million bushels. Corn production in Brazil is 101.0 mmts and in Argentina 50 mmts. Soybean production in Brazil is 123.0 mmts while Argentine soybean production is estimated at 53.0 mmts. soybean stocks at 96.4 mmts versus 95.4 mmts last month
Strategy and outlook
Futures bounced off long term support with strong end user buying supporting values. Prices are likely to probe weekly resistance amid the new trade agreement. The timing of Chinese purchases will provide interesting and indicative of how the balance sheets will be affected.
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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