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Closing Comments

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Closing Comments

Corn

Exporters sold 33.2 million bushels of corn in the week ending January 8, including 32.2 million old-crop bushels. The old-crop sales were up from 15.3 million the previous week and up from the five-year average for the week of 21.6 million bushels.

 

Marketing year sales total 1.109 billion bushels, down 32 million or 3% from the previous year. Exporters typically sell 57% of final corn shipments by this point in the marketing year, whereas they had sold 60% by this point last year. However, this year they have already sold 63% of USDA’s target for the year that ends August 31. As a result, sales to date exceed the seasonal pace needed to hit USDA’s target by 108 million bushels, versus 104 million the previous week.

 

The weekly sales total included 14.7 million bushels designated to “unknown destinations.” There’s been an increase in sales to these unknown buyers in recent weeks. It could be Chinese end users trying to stay under the radar after China lifted its ban on Viptera, or it could be Japan, Mexico, South Korea or another buyer simply trying to take advantage of price breaks.

 

Exporters sold 10.8 million bushels of grain sorghum in the week ending January 8, up from 7.2 million the previous week and up from the five-year average for the week of 2.2 million bushels. The week’s total included 4.1 million bushels sold to China and 6.7 million bushels to “unknown destinations.” The latter is probably a sale to Chinese end users, but we likely won’t know until it is shipped.

 

Corn lost value throughout most of the session before building some afternoon strength to close March down a penny at 3.80 and December down a penny at 4.07 ½.  

Soybeans

Exporters sold 52.8 million bushels of soybeans in the week ending January 8, including 41.6 million old-crop bushels. The old-crop sales were up from 33.5 million bushels sold the previous week and above the five-year average for the week of 33.4 million bushels. The past week’s old-crop sales included 29.2 million bushels sold to China, but that was partially offset by a reduction of previous sales to “unknown destinations” of 20.4 million bushels.

 

Marketing year sales to all destinations total 1.629 billion bushels, up 106 million or 7% from the previous year. Exporters typically sell 75% of final soybean shipments by this point, whereas they had sold 92% by this point last year. That matches the portion of USDA’s target for the current year that has been sold. Sales to date exceed the seasonal pace needed to reach USDA’s target by August 31 by 296 million bushels, versus 299 million the previous week. I expect that gap to narrow at a much faster pace as we move closer to spring.

 

Soymeal sales were relatively low at 72.2K metric tons, up from 37.3K the previous week, but down from the five-year average for the week of 185.9K tons. However, a large backlog of orders remains on the books, which processors now have the soybeans to crush to fill those orders. As a result, shipments for the week ending January 8 totaled 440.2K tons, up from 216.2K the previous week and up from the five-year average pace for the week of 216.1K tons.

 

The National Oilseed Processors Association reports that its members crushed 165.383 million bushels of soybeans in December, essentially matching the record monthly pace set one year earlier. The trade had been anticipating crush of 166.9 million bushels. Looking at the extra day for processors on the calendar this year, I was looking for 171.1 million bushels, but many may have taken that Friday after Christmas off, while operating at full capacity on the other days.

 

Total NOPA crush for the soybean marketing year to date is 585 million bushels, down 7 million from the previous year after a late start this year. NOPA crush to date falls short of the seasonal pace needed to hit USDA’s target by August 31 by 6 million bushels, but that is an improvement from lagging the pace by 16 million bushels the previous week.

 

Soybeans were the weakest of the grains in today’s session. While finding some strength in the last hour of the day – March still closed 18 ¼ lower at 9.91 and November 14 ¾ lower at 976 ½.

Wheat

Exporters sold 13.9 million bushels of wheat in the week ending January 8, including 10.5 million bushels of old-crop wheat. The old-crop sales were up from 5.5 million bushels sold the previous week and were also above the five-year average for the week of 9.2 million bushels. Marketing year sales total 696 million bushels, down 219 million or 24% from the previous year. Sales to date still exceed the seasonal pace needed to hit USDA’s target by May 31 by 8 million bushels, up from 7 million the previous week. Egypt picked up 4 cargos of French wheat as the US struggles to compete.

 

Minneapolis was able to close green with March up ½ at 5.81, Kansas City next down 2 in March at 5.73 with Chicago the weakest at 5 lower in March at 5.32 ¾.

Beef

Boxed beef reached record highs yesterday. Trade reports have been slow with a few cattle in Texas sold at $164 live. Packers are working their way back to black and feedlots believe the packer will become more aggressive on their bids.

Currently April cattle are off $1.075 after putting in new 20 week lows while the feeder months are limit down with March trading at $205.60.

Pork

Export sales data released this past week showed that some of that pork was moving overseas, even with the dollar near 9-year highs at the time. Sales for the week ending January 8 totaled 28.1K metric tons, while actual shipments were strong at 19.8K tons.

Prices paid this week seem to have stabilized with packers back in the black which should support bids. Hams look to be supported on domestic processing demand for Easter.

As of publication, April hogs are up .30 at 78.30.

Closing Market Snapshot

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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