Midwest Marketing Solutions
Cargill, Inc. to introdce plant-based hamburger patties
According to Reuters, Cargill Inc will launch plant-based hamburger patties and ground “fake meat” products in April, the company said, challenging Beyond Meat and Impossible Foods for sales in grocery stores, cafeterias and restaurants.
CME announces record day of trading
Financial market turmoil may be bad for investors, but such frenzied buying and selling is good for Chicago’s exchange operators CME Group and Cboe Global Markets as well as the city’s trading firm industry. CME Group, which operates the biggest futures market in the world, said it had a record day of trading, with 55.3 million contracts trading hands. At Cboe, parent to the Chicago Board Options Exchange as well as stock exchanges in the U.S. and abroad, there was also a significant jump in trading, according to an analyst report from the bank Piper Sandler. CME’s average trading volume for the month prior to this week was 20.9 million contracts, but volume jumped to 47.8 million on Feb. 24 before hitting the record yesterday. At Cboe, option volume tied to contracts that trade on its exchange as well as other exchanges also hit a record of 10.8 million contracts traded on Feb. 24, the report said.
Corn acres could be on the rise
According to Farm Futures survey; U.S. farmers intend to increase corn acreage by 7.68% this year to 96.6 million acres. If these plans hold true, this would be the second largest planting on record, following only 2012’s total of 97.3 million acres. Farmers also intend to plant 85.1 million acres, 4.5 million more soybean acres this spring compared to 2019.
Corn closed the week $.12 lower. Last week, private exporters announced a sale of 123,000 mts of optional origin corn to South Korea.
In the weekly export inspections report; U.S. corn exports, for the week ended 2/20/20, were a marketing year high 35.9 million bushels and were above last year’s same-week exports of 30 mb. Despite the relatively good appearance of corn exports last week, they were still below the roughly 39.6 million bushels/week we estimate shipments need to average through the end of August in order to reach the USDA’s 1.725 billion bushel export projection.
Cumulative exports are still down 47% from last year’s 982 million, while the USDA is projecting a 16.5% decline in exports on the year.
In the weekly EIA report; U.S. ethanol production, for the week ended 2/21/20, was slightly higher at 1.054 million barrels/day (310 million gallons/week) from 1.040 mbpd (306 mil gal/week) the week prior and was 2.5% above last year’s same-week production of 1.028 mbpd (302 mil gal/week). Over the last 12 weeks, U.S. ethanol production has run, on average 3.9% above year ago levels. U.S. ethanol stocks last week ticked lower to 1.038 billion gallons (24.718 million barrels) from 1.041 billion gallons (24.781 mil barrels) the week prior, but easily remain record-high on a same week basis and held onto the 2nd highest on record level in the pullback from last week.
Strategy and outlook
The USDA outlook forum shed a bearish light on the corn market. The COT report shows commercials have a bullish position, however they may be premature. If weekly chart support can hold, this may facilitate a short covering rally. Any weather related rallies need to be sold as producers rid themselves of both old and new crop inventories.
Soybeans closed the week $.03 1/4 lower. Last week, private exporters announced sales of 163,290 mts of soybeans to Mexico and 135,000 mts of meal to the Philippines.
In the weekly export inspections report, U.S. soybean exports last week were a marketing year low 21.8 million bushels, down from the previous week’s 36.9 mb and significantly below last year’s same-week exports of 48.1 mil bu).
For the second time in three weeks, soybean exports also fell below the roughly 25.6 million bushels/week we estimate is needed through the end of August in order to reach the USDA’s 1.825 billion bushel export projection. Cumulative exports of 1.061 billion bushels are still up 15% from last year’s 923 million, but falling fast as they were up more than 26% in early January.
The USDA Ag Outlook Forum suggests new crop soybean stocks will be 320 mb vs. new crop corn stocks at 2.638 bb. This suggests soybean will try to rally against corn to steal a few acres during the spring planting timeframe.
Strategy and outlook
A record South American soybean crop is hurting U.S. exports. Futures continue to test key downside support and may try and rally off of it, although the upside is limited until spring planting.
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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