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Midwest Marketing Solutions

By Brian Hoops - Columnist | Apr 6, 2021

Pademic assistance to include cattle producers

The Pandemic Assistance for Producers plan from USDA includes cattle top-up payments for ranchers who sold into a depressed market after the first Coronavirus Food Assistance Program deadline of April 15. These payment rates vary depending on the class of cattle and was included in the year-end legislation passed in December 2020. Eligible livestock producers will automatically receive these funds, estimated to total $1.1 billion.

Argentina takes action against meat exporters

(Reuters) – Argentina said it had suspended 15 meat exporters for dodging industry regulations, derailing at least 40 tonnes of shipments from one of the world’s best-known beef producers.

MGEX releases March results

MGEX welcomes March 2021 into the record book as the 18th best overall month in history with a total of 259,617 contracts. Furthermore, this past month is the second-best March in history just missing the first place spot by 6%. Electronically, 232,794 contracts were traded in the month of March, making it the 16th best electronic month in the MGEX record book. The Exchange had a total of 6,859 options traded, which is the highest in its history for March.

Corn analysis

Corn closed the week $.07 higher. Last week, private exporters announced sale of 100,800 mts of corn to an unknown destination for 2020/21.

In the weekly export inspections report; U.S. corn exports last week were solid again at 66.7 million bushels, down from the previous week’s 79.4 million bushels, but better than last year’s 50.0 million bushels and the roughly 50.3 million bushels/week in which they need to average through the end of August in order to reach the USDA’s 2.600 billion bushel export projection. Cumulative export inspections of 1.328 billion bushels are up 86% from last year’s 715 million bushels.

In the weekly EIA report; U.S. ethanol production, for the week ended 3/26/21, rebounded to 965,000 barrels/day (284 million gallons/week) from 922,000 bpd (271 mil gal/week) the week prior and ticked above the roughly 956,000 bpd (281 mil gal/week) estimated average pace needed through the end of August in order to reach the USDA’s 2020/21 corn for ethanol usage estimate of 4.950 billion bushels. U.S. ethanol stocks last week fell to an 18-week low of 21.114 million barrels from the previous week’s 21.809 mil barrels and were 193 million gallons (17.9%) below last year’s same-week stocks of 1.080 billion gallons.

The quarterly stocks report was neutral to bullish, showing stocks at 7.701 billion bushels versus estimates of 7.767 billion. Stocks were lower than last year’s 7.952 bb as strong demand suggests the USDA will need to account for these smaller stocks in the April supply/demand report. The prospective planted acres were reported at just 91.14 million vs the average estimate of 93.1 million. This is only up 344,000 acres from the 2020 final report and suggests the corn market needs to rally to secure more seeded acres this spring.

Strategy and outlook

As the spring planting timeframe approaches, producers should consider accepting profits on long positions and begin to hedge 2021 production and establish a minimum price floor. Look for highs to be made in the spring to summer timeframe.

Soybean analysis

Soybeans closed the week $.00 1/4 higher. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. soybean exports, for the week ended 3/25/21, were 15.6 million bushels but down from the previous week’s 18.2 million bushels and were another new marketing year low. Cumulative export inspections of 1.987 billion bushels are up 72% from last year’s 1.158 billion, leaving shipments needing to average roughly 7.8 million bushels/week through the end of August in order to reach the USDA’s 2.250 billion bushel export projection.

The quarterly stocks report was mostly neutral showing stocks at 1.564 billion bushels versus estimates of 1.534 bb, down significantly from last year’s 2.255 bb. The USDA estimated planted acres at 87.60 million, well below the average estimate of 90.1 million acres. This would be an increase of 4.5 million from 2020 as producers across the “I” states of Illinois, Iowa and Indiana switch some acres from corn to soybeans.

Strategy and outlook

The export sales pace looks to have slowed considerably from the surging sales of last fall and early winter. The USDA is already forecasting a slow down in demand and the bullish focus looks to be on possible seeded acres this spring. Producers should maintain their re-ownership positions and look for highs to be made in the spring timeframe. That is when final cash sales should be made and minimum price floors should be locked in for next fall’s harvest.

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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