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Midwest Marketing Solutions

By Staff | Jun 8, 2020

Corn analysis

Corn closed the week $.02 lower. Last week, exporters did not announce any sales.

In the weekly export inspections report; U.S. corn exports, for the week ended 5/14/20, were strong at 45.3 million bushels and continue to run modestly above the roughly 41.6 million bushels/week estimated they will need to average through the end of August in order to reach the USDA’s recently-raised 1.775 billion bushel export projection. Each of the last four weeks’ exports and seven of the previous eight weeks’ have been above the current average “needed” pace, averaging 46.3 million bushels/week for the period vs last year’s 44.6 million/week during the same time frame. Cumulative Export Inspections of 1.033 billion bushels are still down 30% from last year, while the USDA’s new export projection reflects an estimated 14% decline from last year.

In the weekly crop progress and conditions report; U.S. corn planting advanced to 80% complete versus 81% expected, 67% last week, 44% last year and 71% average.

Key states of Iowa is 96% complete versus 82% on average; Minnesota is 95% done, Nebraska is 91%, Missouri 83%, Illinois is 83% and Indiana is 72%.

The laggard states are North Dakota at 20% and South Dakota 67%. Emergence is 43% nationwide versus 40% on average. Iowa is 62%, Minnesota 57%, Nebraska 54%, Illinois 43%, Missouri 58%, Indiana 31% and North Dakota at only 1% with South Dakota 20%. An estimated 76.8 million acres of corn have been planted so far versus 69.4 million which would have been planted if corn planting were moving in line with average levels. Roughly 20.2 million acres of corn remains to be planted based on the USDA’s March 31 Prospective Plantings report.

In the weekly EIA report; U.S. ethanol production, for the week ended 5/15/20, extended the rebound to three consecutive weeks, rising to 195 million gallons/week from 181 mil gal/week the previous week and now reflecting a 23% increase from the low four weeks ago of 158 mil gal/week. This week’s ethanol production implied roughly 66 million bushels of corn was used by the industry, 40 million bushels less than the same week a year ago and putting the estimated 2019/20 total corn for ethanol reduction for the year at 307 million bushels vs the USDA’s marketing year total estimated 428 million bushel decline.

Strategy and outlook

Slow planting in North Dakota and the eastern cornbelt, suggests there will be some prevent plant acres this year. Unlike 2019, the corn market is not rallying to incentivize producers to plant corn past their insurance dates. That suggests the USDA forecast of 97 million acres will not be met. June and July weather can turn hot and dry, giving the market a reason to rally. The COT report is bullish with commercials holding a large net long position.

Soybean analysis

Soybeans closed the week $.04 lower. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. soybean exports last week were a six-week low and second lowest of the marketing year at 12.9 million bushels. They were below the roughly 21.4 million bushels/week average estimated that is needed through the end of August in order to reach the USDA’s just-lowered 1.675 billion bushel export projection. All of the last 8 weeks’ exports were below the current “needed” pace. Cumulative exports of 1.277 billion bushels are still up nearly 5% from last year, but falling with USDA currently estimating soybean exports this year declining 4.2% from last year.

In the weekly crop progress and conditions report; U.S. soybean planting moved to 53% complete versus 56% expected, 38% last week, 16% last year 38% average. Key states include Iowa at 86% versus 45% average, Illinois 59% versus 40% average, Minnesota 74%, Nebraska 78% Indiana 56%, Missouri 27%, South Dakota 40% and North Dakota 9%. Nationwide soybean emergence is 18% versus 12% average with Iowa 25%, Illinois 21%, Indiana 18%, Missouri 10%, Nebraska 29%, Minnesota 18% and South Dakota at 8%. No emergence reported in North Dakota. An estimated 43.3 million acres of soybeans have been planted so far versus 31.1 million which would have been planted if planting were moving in line with average levels. Roughly 40.1 million acres of soybeans remain to be planted based on the USDA’s March 31 Prospective Plantings report.

Strategy and outlook

The fast planting pace and increased soybean acres leaves a potentially bearish supply situation with questions concerning Chinese purchases in the Phase 1 trade agreement. Political tensions are increasing which could cause China to back out of the agreement. The COT report remains bearish to the soybean market with funds holding a large net long position.

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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Midwest Marketing Solutions

By Staff | Jun 8, 2020

Tyson plant temporarily closes

Tyson Foods Inc. said it will temporarily close an Iowa pork plant due to the coronavirus pandemic, a month after U.S. President Donald Trump ordered slaughterhouses to stay open to protect the country’s food supply. An Iowa state official said 555 employees at Tyson’s Storm Lake plant tested positive for the virus, about 22% of the workforce. Tyson will stop slaughtering hogs at the facility and finish processing the animals over the next two days, according to a statement. It will resume operations next week following “additional deep cleaning and sanitizing of the entire facility,” the statement said. The closure is due partly to a delay in COVID-19 testing results and employee absences, according to Tyson. The Storm Lake plant slaughters about 17,250 pigs a day when it is running at full capacity, according to industry data. That accounted for about 3.5% of U.S. production before the pandemic.

Corn analysis

Corn closed the week $.08 higher. Last week, exporters announced sales of 101,600 mts of corn to an unknown destination.

In the weekly export inspections report; U.S. corn exports, for the week ended 5/21/20, were 43.0 million bushels and were comparable to those over the last four weeks averaging 49.3 million bushels/week.

Corn exports will need to average roughly 41.4 million bushels/week, significantly above last year’s weak late May-August export period which averaged only 24.1 million bushels/week to reach the USDA forecast.

Cumulative export inspections of 1.077 billion bushels are still down a considerable 29% from last year’s 1.519 billion, but continually clawing their way back each week after being down more than 50% at the start of 2020.

In the weekly crop progress and conditions report; U.S. corn planting 88% complete versus 90% expected (86-92% range of ideas), 80% last week, 55% last year, 82% average. Most of the key states are planted with North Dakota the biggest laggard at only 54% planted versus 79% normally.

Emergence is becoming a concern as only 64% of the crop has emerged versus 58% on average.

The first corn crop condition rating of the year came in at 70% good/excellent versus last year’s 59% good/excellent initial condition in early June. The corn condition in line with average season-starting conditions over last 10 years. Illinois conditions are only 55% good/excellent.

In the weekly EIA report; ethanol stocks fell to 23.2 million barrels for week ending May 22 versus 23.6 mb last week and 22.6 mb last year. Ethanol production rose for the fifth consecutive week to 724,000 barrels per day, up from 663,000 barrels per day last week although still well below 1,057,000 barrels per day a year ago. Corn used for ethanol was estimated at 73.3 million bushels last week, up from 67.1 mb the week prior but still below last year’s 105.4 mb usage for the same week.

Strategy and outlook

The COT report remains bullish with commercials holding a large net long position and the large speculative funds the largest net short position in history. June and July weather can turn hot and dry, giving the market a reason to rally and funds to cover short positions. If this happens this month, sell multiple years of production.

Soybeans analysis

Soybeans closed the week $.07 1/2 higher. Last week, private exporters announced sales of 390,000 mts of soybeans to China and 354,000 mts of soybean meal to the Philippines.

In the weekly export inspections report; U.S. soybean exports last week were disappointing at 12.2 million bushels, down from the previous week’s 13.1 million bushels, as well as last year’s same-week exports of 19.7 million, while also being the lowest in 7 weeks and the second lowest of the 38 weeks so far of the 2019/20 marketing year. Soybeans need to average about 22.0 million bushels/week to reach the USDA’s 1.675 billion bushel export projection, the fourth consecutive week falling below the “needed” pace. Cumulative export inspections of 1.289 billion bushels are holding onto a slim 4% year-over-year gain, but continually declining, while USDA is estimating this year total exports down 4.2% from last year.

In the weekly crop progress and conditions report; U.S. soybean planting moved to 65% complete versus 69% expected, 53% last week, 26% last year and 55% average. North Dakota is only 29% done versus 60% average. Emergence is 35% nationally versus 27% on average. North Dakota only has 4% emerged and South Dakota is only 19% emerged.

Strategy and outlook

A potentially bearish supply situation remains with questions concerning Chinese purchases in the Phase 1 trade agreement. Chinese purchases of US products are the slowest since 2007 for this time of year. Political tensions are increasing which could cause China to back out of the agreement. A weather related rally must be sold by producers.

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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