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Midwest Marketing Solutions

By Brian Hoops - Columnist | May 25, 2021

JBS shows first quarter profit

The world’s largest meatpacker posted first quarter net profit of $377 million. One year ago, JBS suffered a $1.1 billion loss. With restaurants reopening, U.S. demand for meat is increasing. Exports to Southeast Asia from the United States is also very strong.

Ponzi scheme charges filed

A federal grand jury has charged an Illinois woman and a Georgia man with running a Ponzi scheme that took in $650 million from investors from throughout the United States. Reva Stachniw, Ron Throgmartin and co-conspirator Mark Ray solicited hundreds of millions of dollars from investors, promising returns of ten-to-20 percent within a matter of weeks. The victims were told their money would be backed by investments in cattle. In reality, the funds were used to repay other investors in a Ponzi-style scheme or for personal benefit. Stachniw and Throgmartin allegedly took in millions of dollars while investing little or no money of their own. Federal charges include wire and bank fraud.

Corn analysis

Corn closed the week $.11 3/4 higher. Last week, private exporters announced sales of 128,000 mts to Mexico and sales totaling 5,644,000 mts of corn to China for 2021/22.

In the weekly export inspections report; U.S. corn exports, for the week ended 5/13/21, were strong again at 74.5 million bushels and solidly above the roughly 51 million bushels/week estimated that is needed to average through the end of August in order to reach the USDA’s just-raised 2.775 billion bushel export projection. Cumulative export inspections of 1.853 billion bushels are up 79% from last year’s 1.038 billion with 16 full weeks remaining in the marketing year.

In the weekly crop progress and conditions report; U.S. corn plantings moved to 80% complete versus 84% expected, 67% last week, 78% last year and 68% average. Corn emergence stands at 41% versus 20% last week and 35% average.

In the weekly EIA report; U.S. ethanol production, for the week ended 5/14/21, surged to 1.032 million barrels/day from 979,000 bpd the week prior, a 61-week high going back to March 2020 just before the COVID-shock reductions set in. Additionally, the 53,000 bpd jump in production from the previous week was the largest in 10 weeks. Last week’s production was only 3.6% below same-week 2019 production, considerably above the roughly 8.5% decline production needs to run relative to 2019 through the end of August based on the USDA’s current 4.975 billion bushel annual corn for ethanol usage estimate. U.S. ethanol stocks last week were nearly unchanged at 816 million gallons (19.433 million barrels) vs 815 mil gallons (19.393 mil barrels) the week prior, easily maintaining the lowest same-week status since 2014, and implying weekly ethanol “off-take” at 7.184 mbpd versus7.900 mbpd the week prior, 5.205 mbpd last year and 6.343 mbpd in 2019. –thanks to Randy Middelstat

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.

Soybeans analysis

Soybeans closed the week $.66 1/2 lower. Last week, private exporters announced sales of 142,500 mts of soybeans to Mexico.

In the weekly export inspections report; U.S. soybean exports last week of 11.3 million bushels were up from the previous week’s 9.0 million bushels, a 5-week high and above the roughly 7.6 million bushels/week estimated that is needed through the end of August in order to reach the USDA’s 2.280 billion bushel export projection. Over the last five weeks, soybean exports averaged 8.8 million bushels/week. Cumulative export inspections of 2.058 billion bushels are up 61% from last year’s 1.276 billion.

In the weekly crop progress and conditions report; Soybean planting advanced to 61% complete versus 60% expected, 42% last week, 51% last year and 37% average. Emergence improved to 20% from 10% the week prior and is above the average pace of 12%.

The NOPA crush report came in at 160.31 mb vs estimates of 168.7 mb and down from 178.0 mb last month and 171.8 mb last year. Bean oil stocks were reported at 1.702 bp vs. estimates of 1.785 and 1.771 bp last month and 2.111 last year. This was the smallest bean oil stocks since 2015.

Strategy and outlook

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