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Midwest Marketing Solutions

February 8, 2019
By Brian Hoops - Columnist , Farm News

Young entrepreneur's businesses could be in jeopardy

Hunter Hanson, 21, of Leeds, N.D., is a young man in a hurry. Over the past three years, he has seemed to be an entrepreneurial wonder, registering seven businesses with the state of North Dakota. In early November, the North Dakota Public Service Commission started getting complaints on two of his businesses-Midwest Grain Trading company and NoDak Grain, both based in Devils Lake.

As of Nov. 21, Konrad Crockford, director of the PSC compliance division, says calls have come in related to some $5 million to $6 million in "bounced, canceled or stopped checks or people owed for grain they had priced."

Talks with China continue

China promised to "substantially" expand purchases of U.S. goods after the latest round of trade talks, and both sides planned further discussions to reach a breakthrough with only a month to go before the Trump administration is set to ratchet up tariffs.

Corn analysis

Corn closed the week $.02 lower. Last week, private exporters announced an optional origin sale of 138,000 mts to South Korea.

U.S. corn exports, for the week ended 1/24/19, were 35.2 million bushels and down from 44.4 million bushels last week.

This was also below last year's same-week exports of 39.8 million bushels. More importantly, weekly corn exports were below the roughly 46.5 million bushels/week in which they will need to average through the end of August in order to reach the USDA's current 2.450 billion bushel export projection, the 9th consecutive week in which they were below the "needed" pace.

In the weekly EIA report; U.S. ethanol production, for the week ended 1/25/19, declined solidly to 1.012 million barrels/day (298 million gallons/week) from 1.031 mbpd (303 mil gal/week) the week prior and was 2.7 percent below last year's same-week production of 1.040 mbpd, while also being the fourth lowest production of the last 40 weeks.

Crude oil stocks saw an increase of 920,000 barrels versus an expected increase of 3.2 million barrels. The February crop report should show a bullish final 2018 production figure.

After the report's release, look for prices to work lower into the end of February unless South American weather becomes adverse.

Strategy and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don't store unpriced crop.

Soybeans analysis

Soybeans closed the week $.06 lower. Last week, private exporters did not release any export sales.

U.S. soybean exports last week were 34.2 million bushels, below market expectations and down from the previous week's 41.6 million bushels.

This week's soybean exports were in line with the average level needed in order to reach the USDA's current 1.900 billion bushel export projection. Soybean exports from this point forward last year averaged 27.1 million bushels/week. Brazil's soybean harvest is estimated to be 10-12 percent complete.

ABOIVE cut their soybean production estimate for Brazil to 117.9 mmts and their estimate for Argentina is 55.0 mmts, resulting in a South American production of 172 mmts. If realized this would be the second largest in the last five years.

After the February supply/demand report, weather on late maturing crops will be the sole bullish factor for South American soybean values. February in Brazil and Argentina is like August here as it's a key yield-developing month for three quarters of the crop. If weather turns hot and dry, prices will rally sharply, however with good rains across the country, the price of soybeans should turn south.

Strategy and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don't store unpriced crops.

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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