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BRIAN HOOPS

Mergers

May 4, 2018
Farm News

The mergers of Bayer-Monsanto, Dow-DuPont and ChemChina-Syngenta will have a bearing on ag retailers and farmers. CoBank economist Will Secor says a competitive market will ease any price concerns, but there could be a significant impact on the rebate structure used by ag retailers.

Rather than a simplified process, this new CoBank report suggests the mergers in the seed and crop protection business will make rebate programs more complex. Incentives will likely be targeted toward larger volumes and tie discounts across seed, crop protection and data product lines.

Corn analysis

Corn closed the week $.13 1/4 higher. Last week, private exporters announced sale of 107,600 mts of corn to

an unknown destination.

Weekly export sales of corn showed a total of 24.4 mb (620,500 mt) including cancelations of 3.0 mb (76,600 mt) for the 2018-2019 marketing year. This put total marketing year sales at 1.968 bb, 9 percent less than the previous marketing year. The weekly crop progress report showed 2 percent gain in U.S. corn planting, now at 5 percent complete versus 7 percent expected, up from 3 percent last week but down from 15 percent last year and 14 percent average.

In the weekly EIA report, ethanol production fell 24,000 bpd to 985,000 bpd. This is the 5th straight week of production declines and it was the 1st time in 16 weeks the production has fallen below 1 million bpd. Ethanol inventories increased for the first time in 6 weeks.

U.S. producers should finish planting the corn crop by the middle of the month and weather will then be 95 percent of the pricing influence. The monthly USDA monthly crop report looks to leave our old crop carryover stocks number unchanged as our export pace is steady but unspectacular. After the report, weather will be the only thing left for traders to trade on during the last half of the month. If weather is warm with ample moisture, prices will retreat into the end of the month and the highs for the month should be in by May 10. However, if weather becomes hot and dry, prices will have no choice but to trade higher in an attempt to ration U.S. ending stocks this spring.

Strategy and outlook

As producers get planters out of their sheds and begin seeding the 2018 crop, look to either make sales and reown with call options or buy puts to establish a price floor.

Soybean analysis

Soybeans closed the week $.15 1/4 higher. Last week, private exporters announced sale of 130,000 mts of soybeans to Argentina.

Weekly export sales of soybeans showed a total of 19.8 mb (537,800 mt) with 13.6 mb (371,300 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.999 bb, 3 percent less than the previous marketing year. U.S. soybean planting is 2 percent complete versus 2 percent expected, 5 percent last year and 2 percent average.

The month of May is when U.S. producers begin to aggressively seed the soybean crop. Weather will become the number one pricing influence once 30 percent to 50 percent of the crop has been planted. During the growing season. the commodity funds and commercial entities will use weakness in prices during the planting season to buy September and November futures in anticipation of weather premiums being added as planting progress reaches the 50 percent pace.

The negative scenario of possibility increasing planted soybean acres this spring and of good growing conditions into the last half of the month. If weather conditions are favorable, look for prices to retreat and funds to liquidate long positions if the technical trend turns lower.

Strategy and outlook

As producers get planters out of their sheds and begin seeding the 2018 crop, look to either make sales and reown with call options or buy puts to establish a price floor.

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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