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Midwest Marketing Solutions

By Brian Hoops - Columnist | Dec 22, 2020

Tom Vilsack to lead USDA

The next agriculture secretary is the former agriculture secretary. President-elect Joe Biden has picked Tom Vilsack to lead USDA. During an event in Delaware, Biden said Vilsack “wasn’t anxious to come back, but I was persistent.” Biden said Vilsack’s first job is to help the country recover from two crises, the coronavirus pandemic and the current economic challenges.

Ensuring fair trade

To make sure there is fair trade and competitive marketing for livestock and poultry, USDA has submitted a final rule, defining unfair or unreasonable practices. This establishes four specific criteria when determining whether there has been a violation of the Packers and Stockyards Act. These criteria will help determine if the difference in the price paid to producers is based upon a difference in cost savings, competitor’s prices or terms or from reasonable business decisions. The new rule takes effect January 11, 2021.

Corn analysis

Corn closed the week $.03 1/2 higher. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. corn exports last week were 34.9 million bushels were right in line with most-recent 4-week average exports of 34.1 million bushels. Last year’s exports during the same period averaged roughly 23 million bushels/week. Cumulative export inspections of 470 million bushels are up 65% from last year’s 285 million, leaving exports needing to average a very strong 54.4 million bushels/week through the end of August in order to reach the USDA’s 2.650 billion bushel export projection vs last year’s 36.3 million/week average from this point forward.

In the weekly EIA report; U.S. ethanol production fell to an average of 957,000 bpd, a 7 week low versus 991,000 bpd the prior week. Ethanol stocks rose to a 6 month high of 22.9 million barrels versus 22.1 mb last week and 21.8 mb the same week last year.

Strategy and outlook

As we enter into the key growing period of South American production, producers should maintain their re-ownership of sold inventory with futures and options.

Soybean analysis

Soybeans closed the week unchanged. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. soybean exports, for the week ended 12/10/20, were strong again at 87.0 million bushels, right in line with the most-recent 4-week average of 89.2 million bushels, but down modestly from the previous week’s 95.0 mb. Cumulative export inspections of 1.179 billion bushels remain up 72% from last year’s 687 million bushels at this time, leaving weekly exports needing to average roughly 25.1 million bushels through the end of the marketing year in order for 2020/21 exports to reach the USDA’s 2.200 billion bushel annual projection vs last year’s 24.3 million/week average from this point forward.

The monthly NOPA crush report saw crush at 181.018 mb versus estimates of 180.0 mb. This was down from last month’s 185.2 mb but well above last year’s 164.9 mb and a new record. Soybean oil stocks at 1.558 million pounds was slightly above estimates of 1.548 and above last month’s 1.487 and 1.448 last year.

Strategy and outlook

Producers should have sold soybeans off the combine as there is no carry and the market told you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. The key part of the South American growing season is directly ahead of the us.

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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