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Midwest Marketing Solutions

By Brian Hoops - Columnist | Nov 24, 2020

Net farm income projections to be on the rise

According to the USDA, net farm income is expected to total nearly $103 billion in 2020. If realized, this would be the first time net farm income has been above $100 billion since 2013. AgCentric Director Keith Olander also anticipates a significant increase in net farm income.

“Keep in mind when I say significant, we were running $30,000-to-$35,000 net farm income and for a business, that’s not significant,” he said.

Olander estimates 50-to-70 percent of the net farm income will be coming from government payments.

Corn analysis

Corn closed the week $.14 higher. Last week, private exporters announced sales of 353,270 mts of corn to Mexico and 271,000 mts of corn to an unknown destination.

In the weekly export inspections report; corn inspections totaled 32.2 mb for the week ending Thursday, Nov. 12, 2020. Total inspections in 2020-21 are now at 331 mb, up 68% from the previous year vs. the USDA estimate of corn exports at 2.650 bb in 2020-21, up 49% from the previous year.

In the weekly crop progress and conditions report; U.S. corn crop harvest moved to 95% complete versus 96% expected, 91% last week, 73% last year and 87% average.

In the weekly EIA report; Ethanol production fell to 962,000 bpd versus 977,000 bpa the prior week. This was well below last year’s 1,033,000 bpd figure in 2019. Ethanol stocks remain unchanged at 20.2 mb versus 20.5 mb last year. Estimated corn usage for ethanol production fell to 99.1 mb versus 100.7 mb last week and 103.1 mb last year.

Strategy and outlook

Technicals are bullish and with smaller ending stocks and good demand, values are likely to work higher until South American production is assured. Producers should have sold product and re-owned with futures and options.

Soybeans analysis

Soybeans closed the week $.33 3/4 higher. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. soybean inspections totaled 82.3 mb for the week ending Thursday, Nov. 12, 2020. Total inspections in 2020-21 are now at 815 mb, up 78% from the previous year versus the USDA estimate of soybean exports at 2.125 bb in 2020-21, up 26% from the previous year.

In the weekly crop progress and conditions report; U.S. soybean crop harvest advanced to 96% complete versus 96% expected, 92% last week, 89% last year and 93% average.

The NOPA soybean crush report for October set a new record at 185.245 mb, well above estimates of 177.1 mb; easily beating last month’s 161.5 mb and destroying the previous record of 175.4 mb. Bean oil stocks were close to expectations at 1.487 billion pounds versus 1.448 bp expected. Slightly higher than last month’s 1.433 bp and last year’s 1.423 bp.

Strategy and outlook

Producers should have sold soybeans off the combine as there is no carry and the market is telling you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. Dry weather in parts of Argentina is bullish for U.S. values.

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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