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Midwest Marketing Solutions

By Brian Hoops - Columnist | May 11, 2021

ADM reports first quarter earnings

Archer Daniels Midland is reporting first quarter net income of $689 million, up from $391 million one year ago. ADM’s ag services and oilseed business had a record quarter with operating profits up 84 percent from last year. Strong Chinese demand and lower margins out of South America were seen. ADM’s ethanol business was supported by rising prices and favorable co-product values.

April makes history at MGEX

MGEX reported that April 2021 closed as the second best month in Exchange history with a grand total of 322,207 contracts traded. This past month was the best April in history, beating the previous record holder April 2018 by over 50,000 contracts. MGEX also reported that April’s electronic volume was the second best in history with a total of 294,409 contracts. Additionally, this past month was the best April for options volume with a total of 9,732 contracts. This is the highest monthly options volume since August 2017.

Corn analysis

Corn closed the week $.57 3/4 higher. Last week, private exporters announced sales of 335,788 mts to an unknown destination; 1,360,000 mts of corn to China; 184,100 mts of corn to Mexico and canceled a previous purchase of 147,320 mts of corn to China.

In the weekly export inspections report; U.S. corn exports, for the week ended 4/29/21, were strong at 84.2 million bushels, a 4-week high and solidly above the roughly 47.6 million bushels/week estimate that is needed through the end of August based on the USDA’s 2.675 billion bushel export projection. Over the last 10 weeks, corn exports have averaged 75.9 million bushel/week, with minimum exports during the period of 61.4 million bushels. Cumulative export inspections of 1.708 billion bushels are up 82% from last year’s 936 million.

In the weekly crop progress and conditions report, U.S. corn planting advanced to 46% complete versus 44% expected, 17% last week, 48% last year and 36% average. This is the fastest corn planting pace since 2015. Corn emergence stands at 8%, slightly behind the average pace of 9%.

In the weekly EIA report; U.S. ethanol production, for the week ended 4/30/21, rose modestly to 952,000 barrels/day (280 million gallons/week) from 945,000 bpd (278 mil gal/week) the week prior and was a four week high. Production this week was still 59% larger than last year’s same-week 598,000 bpd (176 mil gal/week) rate, but more importantly, was 8.1% below same-week production in 2019. U.S. ethanol stocks last week increased for the first time in six weeks, while posting the largest single-week increase in 20 weeks, to 858 million gallons (20.440 mil barrels) from 829 million gallons (19.736 mil barrels) the week prior. Overall stocks remain a massive 217 million gallons below last year’s COVID-impacted 1.076 billion gallons and the lowest since 2014 on a same-week basis.

Strategy and outlook

Highs are expected to be made in June ahead of the pollination and acreage report. Producers should consider accepting profits on long positions and begin to hedge 2021 production and establish a minimum price floor at that time.

Soybean analysis

Soybeans closed the week $.54 higher. Last week, private exporters did not announce any private sales.

In the weekly export inspections report; U.S. soybean exports last week were a marketing year low at 5.3 million bushels and below the roughly 8.2 million bushels/week estimated they will need to average through the end of August in order to reach the USDA’s 2.280 billion bushel export projection. Cumulative export inspections of 2.038 billion bushels are up 64% from last year’s 1.241 billion, but the year-over-year gain has been declining precipitously given the slowdown in shipments of late.

In the weekly crop progress and conditions report; soybean planting moved to 24% complete versus 25% expected, 8% last week, 21% last year and 11% average. Oats are now 72% planted versus 62% average with cotton planting 16% complete versus 17% last year, 12% last week and 16% average.

USDA reported U.S. soybean crush in March was 188.2 million bushels, in line with average market expectations of 188.4 million and 4.0 million bushels below last year’s March crush of 192.2 million. This followed February crush of 164.3 million, which was down 11.0 million bushels from last year and puts 2020/21 marketing year-to-date (Sept-March) soybean crush at 1.301 billion bushels versus 1.265 billion last year, up 36 million bushels.

Strategy and outlook

Producers should maintain their re-ownership positions and look for highs to be made in the spring to summer 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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