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Midwest Marketing Solutions

March 20, 2020
By Brian Hoops - Columnist , Farm News

Food safety standards in China

China has drawn up food safety standards on residue limits of growth hormones in beef, a move seen as a further step towards opening up its market to American imports of the meat.

China has previously had zero tolerance for any residues of growth hormones, which has restricted the amount of beef it can import from the United States where the drugs are widely used.

Corn analysis

Corn closed the week $.09 3/4 lower. Last week, private exporters announced a sale of 136,000 (metric tons) mts of corn sold to South Korea.

In the weekly export inspections report; U.S. corn exports last week of 32.7 million bushels (mb) were down from the previous week's 35.3 mb but were above last year's same-week exports of 31.2 mb.

Not a single week's exports so far this year have met the current 40.1 million bushel/week average that is needed through the end of August in order to reach the USDA's 1.725 billion bushel export projection.

Cumulative exports of 589 million bushels are down 44% from last year's 1.048 billion bushels, while USDA is projecting a nearly 17% decline in exports on the year.

The USDA left U.S. corn ending stocks at 1.892 bb, yield was left unchanged at 168.0 bpa and exports were left unchanged at 1.725 bb. I believe the USDA is way overestimating old crop corn exports. Corn will need to average about 40 mb each week to hit the 1.725 bb forecast until the end of this marketing year. Corn hasn't reached that level once so far in this marketing year and with Argentina and Ukraine harvest starting, reaching their forecast is going to be next to impossible unless something drastic happens to the Argentine crop quickly.

Strategy and outlook

A bounce off long term technical support should be seen as a selling opportunity. Any weather related rallies need to be sold as producers rid themselves of both old and new crop inventories.

Soybean analysis

Soybeans closed the week $.42 1/4 lower. Last week, private exporters announced sales totaling 440,500 mts of soybeans to unknown destinations.

In the weekly export inspections report, U.S. soybean exports, for the week ended 3/05/20, of 21.0 million bushels were a new low for the 2019/20 marketing year. Cumulative exports of 1.107 billion bushels are now up just 12% from last year's 987 million after being up 26% year-over-year in early January.

In order to reach the USDA's 1.825 billion bushel export projection, shipments will need to average nearly 26 million bushels/week during March-August, a feat only viewed as possible if China makes substantial purchases of old crop soybeans at some point. The USDA left US soybean stocks at 425 mb vs. 425 mb last month. The USDA made no changes to the US 2019/20 balance sheet and the yield was the same at 47.4 bushels per acre. Brazil's soybean production was raised 1.0 mmt to 126.0 mmt while Argentina's bean production was also raised 1.0 mmt to 54.0 mmt.

Strategy and outlook

A record South American soybean crop is hurting US exports. Futures broke through key support and now are challenging next support at the spring of 2019 lows.

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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