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BRIAN HOOPS
November 10, 2017

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A protein shortfall in this year's U.S. soybean crop has forced processors like Bunge Ltd. to cut the amount of the nutrient they can guarantee in soymeal, prompting concerns that animal feed costs and meat prices could rise. Adverse crop weather this summer likely dragged down the protein content of soybeans, prompting concern that the soymeal produced at crushing facilities will be light on protein and other key nutrients, traders and agriculture experts said. Soy plants can tweak processing steps to maximize protein yields and animal feeders can alter rations to include other feeds and supplements. But consumers may ultimately feel the pinch in higher poultry and pork prices as the steeper production costs are passed along.

Corn analysis

Corn closed the week $.00 3/4 higher. Last week, private exporters announced sales of 1,458,760 mts of corn to Mexico, 135,000 mts of corn to South Korea and 251,000 mtf of sorghum to South Korea. Weekly export sales of corn showed a total of 35.5 mb (901,400 mt) with 31.9 mb (811,400 mt) for the 2017-2018 marketing year. This put total marketing year sales at 670.4 mb, 31 percent less than the previous marketing year. In the weekly crop progress report, NASS reported US corn crop conditions at 66 percent good/excellent versus 66 percent expected, unchanged from last week. U.S. corn harvest advanced to 54 percent complete versus 38 percent last week and behind the average pace of 72 percent.

In the weekly EIA report, crude oil stocks decreased by 2.4 versus 1.3 decline expected; gas stocks declined 4.0 vs 1.6 decrease expected, distillates showed a decline of 03 versus 2.5 decline expected and ethanol production averaged 1,056k bpd vs 1,039k the prior week. FC Stone increased corn yield to 173.7 bpa, up from 169.2 bpa last month. Informa raised their 2017 U.S. corn yield estimate to 173.4 bpa from 170.5 bpa previously. This equates to a 2017 corn production of 14.410 billion bushels vs. 14.182 billion bushels previously. Look for farmer selling to slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.

Strategy and outlook

Producers should only make sales that address cash flow need during harvest and store balance of production, but not in commercial storage facilities.

Soybeans analysis

Soybeans closed the week $.01 lower. Last week, private exporters did not report any private sales.

Weekly export sales of soybeans showed a total of 72.8 mb (1,982,200 mt), with 72.3 mb (1,967,000 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.116 bb, 16 percent less than the previous marketing year. In the weekly crop progress report, NASS reported US soybean harvest advanced to 83 percent complete versus 83 percent expected, up from 70 percent last week and close to the average of 84 percent.

FC Stone released their final client survey and soybean yields were unchanged at 49.9 bpa. Informa trimmed its 2017 U.S. soybean yield estimate down to 49.7 bpa from 50.0 bpa previously. This would trim total production down to 4.447 billion bushels from 4.474 billion bushels previously.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter. The market will be anticipating a record soybean crop in South America and updates on this year's production from South America will be a major driving force for prices throughout the winter. Weather during the South American growing season will be closely watched.

Strategy and outlook

Producers should have made sales that address cash flow need during harvest. Do not store soybeans in commercial storage.

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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