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Midwest Marketing Solutions

By Brian Hoops - Columnist | Dec 9, 2020

Deere and Company fourth quarter earnings

Deere and Company is reporting fiscal year fourth quarter earnings of $757 million. That’s an increase compared to $722 million one year ago. For fiscal 2020, Deere says net income is $2.75 billion compared to $3.25 billion last year. Deere’s revenues were down two percent in the fourth quarter to $9.73 billion and down nine percent to $35.5 billion year over year. Equipment sales for the quarter were $8.66 billion and $31.27 billion for the year.

MGEX November

MGEX reported the second best November in the history of the Exchange with a total of 260,612 contracts traded. Compared to November 2019, this past month saw an 11% increase. This also puts November 2020 in the record book as the 16th best month overall for MGEX. Electronic volume was reported at 233,637 contracts, making it the 13th best overall month for electronic volume.

Corn analysis

Corn closed the week $.15 lower. Last week, private exporters announced sales of 182,050 mts of corn to Mexico and 344,000 mts of corn to an unknown destination.

In the weekly export inspections report; U.S. corn exports last week were 35.0 million bushels and significantly above last year’s same-week exports of 17.3 mil bu. Cumulative export inspections of 399 million bushels are up 68% from last year’s 238 million, leaving weekly shipments needing to average an estimated very strong 53 million bushels/week through the end of August versus last year’s 35.6 million/week average from this point forward and record average weekly exports during Dec-Aug of 50.3 million bushels/week in 2017/18.

In the weekly EIA report; U.S. ethanol production fell to 974,000 bpd vs 990,000 bpd the prior week and 1,060,000 bpd a year ago. U.S. ethanol stocks rose to a 24 week high at 21.2 mb versus 20.9 mb last week and 20.6 mb last year.

Strategy and outlook

Technicals just turned bearish with an outside weekly reversal charted. If there is follow through on this reversal, a larger correction could develop. Producers should have sold product and re-owned with futures and options.

Soybean analysis

Soybeans closed the week $.31 3/4 lower. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. soybean exports, for the week ended 11/26/20, were 74.8 million bushels were well above last year’s same-week exports of 57.9 mil bu. Cumulative export inspections of 980 million bushels are up 67% from last year’s 587 million and remain record high through the first quarter of 2020/21, surpassing the previous record of 959 million bushels through 13 weeks in 2016/17. In order to reach the USDA’s 2.200 billion bushel export projection, soybean exports will need to average roughly 29.0 million bushels/week over the remainder of the marketing year versus last year’s 25.6 million/week.

USDA reported U.S. soybean crush in October was 196.6 million bushels, exactly in line with average market expectations, up significantly in seasonal fashion from September crush of 171.1 million bushels and 5% above last year’s Oct crush of 187.2 million bushels. Moreover, Oct. crush set a new all-time monthly record in surpassing March 2020’s 192.2 million bushels. USDA reported 2.282 billion pounds of soybean oil was produced in October versus 1.968 billion in September and 2.150 billion pounds last year and USDA reported end October U.S. soybean oil stocks were 1.964 billion pounds, up solidly from 1.849 billion in September, notably above last year’s 1.821 billion pounds and were the 2nd highest October stocks of the last 8 years.

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 also 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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