Weekly Market Recap October 25, 2019

Landus Flag On Equipment 2016

On Friday, December corn futures ended the day unchanged at $3.86 3/4, but that is down 4 1/4 for the week. Looking ahead to December of 2020 futures, they ended at $4.07 3/4, down 2 1/4 for the week.

November soybean futures lost 13 cents today, ending at $9.20 1/4, down 13 3/4 for the week. At about 1:00 PM, they were only down 6 or 7. It sounds like a lot of country elevators sold heavily in the last 15 minutes of trade, anticipating buying soybeans over the weekend. November of 2020 soybeans were off 6 1/2 today, finishing the week down 5 at 9.67 3/4.

Take a good look at the differences therebetween this year and 12 months from now. Corn futures are 21 cents better, and soybean futures are 47 1/2 cents better. This is why we’re encouraging people to think about putting in offers for next harvest. The question is, how much better would you feel if we were paying you 20 cents more for corn today? Or 40 some cents more for your soybeans? Think about what level you’d like to be selling, and if it’s within reason, put in an offer for a small amount for next Fall.

The BIG story of the week is the weather, all across the Midwest. This on again, off again Harvest activity is really starting to get old. We get 2 to 3 days in a row where guys can go, and then we get another rain event to stop everyone for another 2 to 3 days or more. Looking at the weather forecast for next week, though, we sort of have a good news, bad news situation. The good news is that it doesn’t look like we have rain in the forecast. The bad news is that the European weather model is showing 6-12 inches of snow in Eastern Nebraska and Western Iowa. However, the GFS model doesn’t have any snow at all in the forecast. So, we’ll wait and see what really transpires, but it would be nice to get a full week to 10 days of nothing but sunshine and clear skies.

Some bullish inputs for corn include:

  • Another increase in weekly ethanol production, up 7 million gallons to 293 million gallons.
    • The weekly ethanol stocks report showed that stocks fell 29 million gallons to 897 million gallons, down 11% from mid-October a year ago. 
    • U.S. ethanol is also quoted at 11 cents less than Brazilian ethanol.
    • The most recent calculations show that most ethanol producers are above their break-even line.
  • December crude oil futures have rallied a little and earlier this week hit a 3-week high.
    • Crude oil inventories have fallen recently, now showing the lowest inventory levels in more than a year and a half.
  • Harvest progress continues to lag, with the USDA pegging U.S. progress at 30% vs. 48% last year and 47% on average.
    • For Iowa, they are showing 15% harvested vs. 27% last year and 34% on average. 
    • Illinois and Indiana were both estimated at 36%, Nebraska at 30% and Minnesota at 11%. Except for Nebraska, these stated are also significantly behind last year and their average pace. 

Bearish inputs for corn include:

  • Despite the recent few weeks of increasing weekly ethanol production, we’re still 3% behind last year and well below the pace needed to meet USDA’s yearly estimates.
  • South American corn planting continues to progress, with Brazil estimated at 47% complete and Argentina at 28%.
    • Both are behind last year and the average pace, but the expectation is that South American corn production will increase by about 3% this year, and that they will harvest a record number of hectares this year.
  • U.S. exports last week were just under 21 million bushels, vs. almost 41 million bushels this time last year.
    • Cumulative exports for this crop year are down 62% from this time last year.

Soybean bullish inputs include:

  • China announced some more waivers earlier this week for soybean purchases, and are expected to buy another 10 million metric tons of U.S. soybeans. They and their U.S. counterparts are working to finalize the discussions of a couple of weeks ago, with the hope of signing some sort of agreement in mid-November when Trump and Xi are in Chile for the APEC Summit.
  • Soybean exports last week hit a high for this crop year, at 47.6 million bushels. Through the first 7 weeks of the year, exports are up about 7% from last year at this time. We will need to average about 33 million per week to hit the USDA projections.

Bearish inputs include:

  • Harvest progress, as of Sunday, continues to lag last year and the average pace. Overall, the U.S. was 46% harvested vs. 51% last year and 64% on average.
    • In Iowa, progress was reported at 48% vs. 17% last week and 61% on average. This seems low based on what we have seen at Landus Cooperative locations so far. 
    • Illinois, Indiana and Minnesota are all behind last year and the average pace. Minnesota was said to be 42% done, vs. 82% on average.
  • Even if China and the U.S. sign something next month, it still feels like we are a long way from putting this entire situation behind us. It’s going to take a lot more time until anyone feels comfortable with this relationship.

There is a WASDE report due on November 8th. This will be the next time we get a chance to see what the USDA is thinking for the U.S. corn and soybean crops.

As mentioned above, keep an eye on next harvest soybean and corn prices. We’d encourage some $9 cash soybean offers and $3.65 to 3.75 cash corn offers.

Here’s hoping that we miss whatever moisture is headed this way next week and the combines can continue to roll. Be safe.

This week’s podcast is available here: https://landuscooperativeexperience.podbean.com/