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BRIAN HOOPS

May 5, 2017
Farm News

Green Plains Cattle Company plans to acquire two cattle feeding operations from Cargill

Green Plains Inc. announced that its subsidiary, Green Plains Cattle Company, has entered into an asset purchase agreement to acquire two cattle-feeding operations from Cargill for $36.7 million, excluding working capital.

The transaction includes feed yards located in Leoti,Kan. and Yuma, Colo. and will add capacity of 155,000 head to the company's operations.

Upon completion of the acquisition, Green Plains Cattle Company will become the fourth largest cattle-feeding operation in the United States with total capacity of more than 255,000 head.

As part of the transaction, Green Plains Cattle will also enter into a long-term supply agreement with Cargill Meat Solutions to provide a reliable supply of cattle from the Leoti and Yuma locations, as well as Green Plains' existing feedlot in Kismet, Kan., with appropriate flexibility and economic opportunities for both parties.

CORN

ANALYSIS

Corn closed the week 2 1/2 cents higher. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 39.3 mb (999,000 mt) with 38.9 mb (987,900) for the 2016-2017 marketing year. This was above the 12.6 mb (320,700 mt) needed this week to be on pace with USDA's April demand projection of 2.225 bb. The weekly crop progress report showed corn planting at 17 percent, above predictions of 15 percent, which is only 1 percent behind the 5 year average.

Last year corn seedings were 28 percent complete at this time. State breakdown shows Texas 68 percent planted, Missouri 46 percent, Kansas 21 percent, Illinois 34 percent, Indiana 15 percent, Nebraska 17 percent, Iowa 8 percent, and Minnesota 6 percent.

In the weekly EIA report, crude stocks fell 3.6 million, much more than trade expectations of a decline of 1.8 million. Ethanol production was 987,000 bpd vs. 993,000 bpd expected.

Weather will now move to the forefront of traders minds. A wet start to the growing season has failed to inspire a meaningful rally. By the last half of May, the weather pattern looks to turn warm and dry and extend into June. This will gives producer their best opportunity to make sales as prices rally to on the hotter and drier weather patter.

Strategy and outlook

Commercials are bullish and producers should have re-owned previous sales during March ahead of the growing season.

SOYBEANS

ANALYSIS

Soybeans closed the week 5 and a1/4 cents lower. Last week, private exporters did not report any private sales.

Weekly export sales of soybeans showed a total of 32.3 mb (880,400 mt) with 29.7 mb (808,100 mt) for the 2016-2017 marketing year. This raised total sales to 2.072 bb, above USDA's April demand projection of

2.025 bb. The weekly crop progress report placed U.S. soybean planting at 6 percent, double the 5 year average of 3 percent, and much higher than the analysts estimate for 2 percent complete.

Soybeans should find support from an effort to return to profitability to encourage farmers to not switch from corn to soybeans. Look for soybeans to maintain their premium to corn to ensure adequate supplies of soybean stocks. Commercials are bullish to the entire soy complex with meal and bean oil resting just above key technical support. Soybeans are close to breaking their technical downtrend on the weekly charts. If this happens, look for the funds to be aggressive in covering short positions as they know price swings can be large during the growing season.

Strategy and outlook

Maintain re-ownership strategies into the summer months. Beans fell below key support, a great time to increase re-ownership.

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.

Brian Hoops can be reached at (605) 660-1155.

 
 

 

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