homepage logo

Midwest Marketing Solutions

By Brian Hoops - Columnist | Jul 20, 2021

Risk Manaement Agency

In the past, the Risk Management Agency conducted an automatic audit when a crop insurance claim reached $200,000. RMA Acting Administrator Richard Flournoy told RRFN that was seen as a concern with the amount of drought-related claims this year. “Now, they’re not automatically going to be audited. There’s a new process where we do what is called data-mining so it is very precise on who is selected and that will dramatically reduce the audits.”

Corn analysis

Corn closed the week $.36 higher. Last week, private exporters did not announce any sales.

In the weekly export inspections report; U.S. corn exports, for the week ended 7/08/21 of 39.1 million bushels were below the roughly 51 million bushels/week that is needed through the end of August to reach the USDA’s export projection and were the lowest in 25 weeks. Two of the last three week’s exports have fallen below the “needed” pace and opens the door for the potential of 2020/21 exports falling a bit short of the USDA’s 2.850 billion bushel projection. Over the last three weeks, corn exports averaged 42.8 million bushels/week. Cumulative export inspections of 2.329 billion bushels are up 68% from last year.

In the weekly crop progress and conditions report; U.S. corn conditions improved 1% to 65% good/excellent versus 65% expected, 64% last week and 69% last year. Iowa ratings jumped 4% to 66%; Minnesota gained 1% to 42%; Nebraska lost 5% to 77%; Illinois lost 5% to 60% and Missouri gained 2% to 61% good/excellent. 26% of the crop is now silking, slightly behind the average of 30%.

In the weekly EIA report; U.S. ethanol production, for the week ended 7/09/21, pulled back to 1.041 million barrels/day (306 million gallons/week) from 1.067 mbpd (314 mil gal/week) the week prior, which was a 4-week low. However, this pace continues to run at a pace higher than is needed in order to reach the USDA’s 5.050 billion bushel 2020/21 U.S. corn for ethanol usage estimate. Ethanol stocks were essentially unchanged at 21.134 mb this week versus 21.149 mb last week vs. 20.6 mb last year.

In the supply/demand report the USDA used planted acres of 92.7 million and kept yield unchanged at 179.5; resulting in a production figure of 15.165 bb. From a demand stand point, feed usage was increased by 25 mb and export were up 50 mb for a total of 75 mb demand increase. As production was increased by 150 mb, the net result was a 75 mb increase in ending stocks to 1.432 bb. The USDA lowered the Brazil corn crop to 93.0 mmts from 98.5 mmts last month.

Strategy and outlook

Highs are normally in place by now. Weather forecasts will determine long term price direction. Producers should have some hedges in place for 2021 production and a minimum price floor established.

Soybean analysis

Soybeans closed the week $.62 1/2 higher. Last week, private exporters announced sales of 228,600 mts of soybeans to Mexico and 112,200 mts of soybean meal to Mexico.

In the weekly export inspections report; U.S. soybean exports last week of 7.4 million bushels and were slightly above the roughly 6.4 million bushel/week average pace that is needed over the final 7 weeks of the marketing year in order to reach the USDA’s 2.280 billion bushel export projection. Over the last 8 weeks, soybean exports have averaged 6.9 million/week for the period.

In the weekly crop progress and conditions report; U.S. soybean conditions were unchanged at 59% good/excellent versus 60% expected, 59% last week and 68% last year. Iowa gained 6% to 65% g/e; Minnesota improved 1% to 45%; Missouri gained 1% to 56% while Nebraska lost 1% to 79% and Illinois lost 7% to 56%. 46% of the crop is blooming, slightly ahead of the average of 40%. 10% of the crop is setting pods.

In the USDA supply/demand report; the USDA left yields unchanged from last month at 50.8 bpa with a production of 4.405 bb. Total usage was left unchanged at 4.420 bb leaving ending stocks at 155 mb.

The monthly NOPA soybean crush was bearish with only 152.41 mb crushed in June, well below estimates of 159.5 mb and down from last month’s 163.5 mb and last year’s 167.3 mb. This was the lowest monthly crush in 2 years. Soybean oil stocks came in at 1.537 bp, below estimates of 1.623 bp vs. last month’s 1.671 bp and last year’s 1.778 bp.

Strategy and outlook

Highs are normally in place now although weather forecasts will determine long term price direction. Producers should have some hedges in place for 2021 production and a minimum price floor established.

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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page