Midwest Marketing Solutions
Bunge sells locations
Bunge plans to sell 35 of its U.S. grain elevators to the Zen-Noh Grain Corporation. ZGC was established in 1979 in New Orleans to provide a stable supply of feedgrains and soybeans for Zen-Noh’s feed mills in Japan. ZGC is affiliated with Consolidated Grain and Barge to supply most of that product.
CME Group Inc., first quarter results
CME Group Inc. reported financial results for the first quarter of 2020. The company reported revenue of $1.5 billion and operating income of $960 million for the first quarter of 2020. Net income was $766 million and diluted earnings per share were $2.14. On an adjusted basis, net income was $836 million and diluted earnings per share were $2.33. Financial results presented on an adjusted basis for the first quarter of 2020 and 2019 exclude certain items, which are detailed in the reconciliation of non-GAAP results.
MGEX has productive April
MGEX reported that April 2020 as the second best April in history with a total exchange volume of 256,276 contracts. This past month also entered the record book as the 14th best overall month in history of the Exchange. The total exchange volume from this past month was also 7% higher compared to April 2019. Additionally, April was the 12th best month for total electronic volume with a total of 227,898 contracts. Open interest was 72,644 contracts, which is 11% higher compared to this time last year.
Corn closed the week $.05 1/2 lower. Last week, private exporters did not announce any export sales.
In the weekly export inspections report; U.S. corn exports, for the week ended 4/23/20, were 42.4 million bushels, slightly above the average needed pace of 40.2 million bushels/week estimated to reach the USDA’s 1.725 billion bushel export projection, with four of the last five weeks having done so. Cumulative exports of 878 million bushels are still down 36% from last year’s 1.364 billion as they continue attempting to claw back to the USDA’s 16.5% year-over-year decline projection.
In the weekly crop progress and conditions report; U.S. corn planting jumped to 27% complete vs 22% expected, 7% last week, 12% last year and 20% average. Key states of Iowa is now 39% done, Illinois is 37%, Nebraska is 20%, Minnesota is 40% and Missouri is 25%. Normal pace for next week is 39%.
In the weekly EIA report; U.S. ethanol production, for the week ended 4/24/20, declined again, falling to 537,000 barrels/day from 563,000 bpd the week prior and was nearly 48% below last year’s same-week production of 1.024 million bpd. Ethanol production over the last three weeks averaged 46% below last year. Based on this week’s ethanol production, ethanol demand for corn was 54.4 mb last week vs. 102.1 mb last year. This brings the 2019/20 marketing year-to-date total corn for ethanol usage decline to an estimated 173 million bushels.
Strategy and outlook
Rapid planting pace and likely the second largest planted acreage in history leaves a bearish supply scenario at a time when ethanol demand is sliding due to the closing of the economy. Until the economy opens back up and energy consumption returns to more normal patterns, which likely won’t be until late summer, corn usage will remain subdued and old crop stocks swell. The fundamentals suggest to sell this market on weather related rallies with a drought the best chance for a long term rally.
Soybeans closed the week $.11 /2 higher. Last week, private exporters announced sales of 264,000 mts of soybeans to China and 108,864 mts of soybeans to Mexico.
In the weekly export inspections report; U.S. soybean exports last week of 20.4 million bushels, again below the roughly 26.2 million bushels/week estimated to reach the USDA’s 1.775 billion bushel export projection, now reflecting the 10th consecutive week in which exports failed to reach the “needed” pace. Cumulative exports of 1.230 billion bushels are still up 6.1% from last year’s 1.159 billion, while the USDA is estimating 2019/20 exports 1.5% higher than last year. Soybean exports from this point forward last year averaged 28.9 million bushels/week.
In the weekly crop progress and conditions report; U.S. soybean planting is now 8% complete vs 8% expected, 2% last week, 2% last year and 4% average. Iowa is 9% done, Illinois is 18%, Indiana is 11%, Minnesota is 5% and Nebraska is 8% done. Normal pace for next week is 11%.
Strategy and outlook
Producers are actively seeding this year’s soybean crop at a near record pace. The fast planting pace and increased soybean acres leaves a potentially bearish supply situation without the aid of strong export demand. The COT report has turned decidedly bearish to the soybean market. The fundamentals suggest to sell this market on weather related rallies with a drought the best chance for a long term rally.
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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