THE MARKET INSIDER WEEKLY NEWSLETTER

Transcription

1 THE MARKET INSIDER WEEKLY NEWSLETTER April 29, 2018 By: Brian Hoops, President Midwest Market Solutions, Inc. VISIT OUR WEBSITE AT FOLLOW US ON TWITTER AT twitter.com/ MidwestMarkets NEWS AND ANALYSIS 2 CORN OUTLOOK 3 SOYBEAN OUTLOOK 5 WHEAT OUTLOOK 7 LIVE CATTLE OUTLOOK 9 LEAN HOG OUTLOOK 10 COMMITMENT OF TRADERS MARGIN REQUIREMENTS 12 CALENDAR OF EVENTS 13 COMPANY INFO 14 DISCLAIMER 14 1

2 NEWS *Thanks to Reuters News, Bloomberg News, Dow Jones Newswires and Red River Farm Network. *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. *President Donald Trump plans to nominate Dan Berkovitz to the Commodity Futures Trading Commission. Berkovitz is a partner in a law firm and previously served as general counsel at the CFTC. *South Dakota Senator John Thune is asking USDA to make administrative changes to the Livestock Indemnity Program. Thune wants to allow veterinarians to certify livestock losses to expedite assistance to farmers and ranchers. With the calving season underway, higher-thannormal death losses have been reported. *(WSJ) Commodity Futures Trading Commission Chairman J. Christopher Giancarlo wants to make swaps trading more flexible and plans to introduce rules and revisions to the Dodd-Frank Act as early as July, says Amir Zaidi, director of the Division of Market Oversight. Giancarlo likens his plan to a software upgrade. *The rate of layoffs in the U.S. fell in late April to the lowest level since 1969, yet another sign a roaring labor market shows no sign of cooling off. Initial jobless claims fell by 24,000 to 209,000 in the week ended April 21, the government. Economists surveyed by MarketWatch had forecast a 230,000 reading. The more stable monthly average of claims declined by 2,250 to 229,250, the government said. The number of people already collecting unemployment benefits, known as continuing claims, dropped by 29,000 to 1.84 million. *A federal jury awarded more than $50 million in damages to neighbors of an industrial hog operation found responsible for intense smells, noise and other disturbances so bad people couldn't enjoy their rural homes. Jurors awarded the 10 neighbors of a 15,000-head swine operation a total of $750,000 in compensation, plus $50 million in damages designed to punish the corporation that owns the animals. Lawyers didn't sue the Bladen County farm's owner, instead targeting the hog-production division of Virginia-based Smithfield Foods. The Chineseowned company uses strict contracts to dictate how farm operators raise livestock that Smithfield owns. 2

3 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 marketing year. This put total marketing year sales at bb, 9% less than the previous marketing year. The weekly crop progress report showed 2% gain in US corn planting, now at 5% complete vs 7% expected, up from 3% last week but down from 15% last year and 14% 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% 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 & 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. CORN 3

4 US DOLLAR CRUDE OIL 4

5 SOYBEANS 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 marketing year. This put total marketing year sales at bb, 3% less than the previous marketing year. US soybean planting is 2% complete vs 2% expected, 5% last year and 2% 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% to 50% 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% 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 & 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. WEEKLY SOYBEANS 5

6 SOYBEAN OIL SOYBEAN MEAL 6

7 WHEAT ANALYSIS For the week, Chicago wheat closed $.20 3/4 higher; Kansas City wheat closed $.28 1/2 higher and Minneapolis wheat $.02 1/4 higher. Last week, private exporters did not report any private sales. Weekly export sales for all wheat showed a total of 21.2 mb (577,900 mt) with 10.9 mb (297,200 mt) for the marketing year. This puts total marketing year sales at 855 mb, 16% below the previous marketing year. In the weekly crop progress and conditions report, US winter wheat conditions were unchanged from last week at 31% good/excellent vs 32% expected 31% g/e last week and remain below the 54% rating of last year. HRW conditions declined due to South Dakota and Colorado, while Kansas and Oklahoma were unchanged and SRW & white wheat conditions improved. US spring wheat planting was unchanged from last week at 3% complete vs 7% expected, well behind 21% last year and 25% average. May is the key reproductive month for winter wheat. Winter wheat is now in need of light rain followed by warm and sunny conditions. A hot and dry weather pattern early in the month will send prices sharply higher. By the middle of the month and into the end of the month should produce lower prices as the market prepares for harvest and the key reproductive timeframe for wheat will be past. Of course, adverse weather during May will send prices soaring. STRATEGY & OUTLOOK The increased spring wheat acreage forecast will make it difficult for spring wheat to sustain rally attempts. Look to sell out inventory and use options to manage risks on sharp rally attempts. WEEKLY CHICAGO 7

8 WEEKLY KANSAS CITY WEEKLY MINNEAPOLIS 8

9 LIVE CATTLE ANALYSIS Last week, live cattle closed $3.27 higher while feeder cattle closed $2.22 higher. Last week's Fed cattle trade was active late in the week in the South at $124/cwt. Trade in the North was only lightly tested at $124 live and $197 dressed. Prices were $2 to $3 firmer compared to last week's trade. The weekly Fed Cattle Exchange saw a total of 3,194 cattle for sale, with no sales reported. There were offers in at $120-$121 but no takers. Weekly steer weights were down 5 pounds from last week at 867 pound vs. 872 pounds a week ago, which is a positive step, but weights are 19 pounds heavier than a year ago. Net sales of 18,500 MT for 2018 were down 7 percent from the previous week and 9 percent from the prior 4-week average. In the cold storage report, total red meat supplies in freezers were up 1 percent from the previous month and up 7 percent from last year. Total pounds of beef in freezers were up 1 percent from the previous month but down slightly from last year. STRATEGY & OUTLOOK If the cattle on feed reports are accurate, producers should be hedged summer and fall month cattle as bigger supplies will mandate demand and exports exceed last year s pace. WEEKLY LIVE CATTLE 9

10 LEAN HOGS ANALYSIS Lean hogs closed the week $4.87 lower after bouncing off key weekly chart support. Weekly hog weights increased to pounds from pounds the week prior and remain above last year, which was pounds. Net sales of 26,400 MT for 2018 were up 47 percent from the previous week and 32 percent from the prior 4-week average. Frozen pork supplies were up slightly from the previous month and up 12 percent from last year. Stocks of pork bellies were up 21 percent from last month and up 188 percent from last year. STRATEGY & OUTLOOK Producers can carry all risk in the cash market as prices bounce off weekly support. WEEKLY LEAN HOGS WEEKLY FEEDER CATTLE 10

11 COMMITMENT OF TRADERS REPORT COMMENTS AND ANALYSIS According to the COT report, the funds were light sellers of corn, soybeans and wheat last week. The report has reached a more neutral pattern and is not showing a clear direction of bullishness or bearishness. The commercials are showing bullish readings for both lean hogs and live cattle. 11

12 MARGIN REQUIREMENTS Hedge Rates Speculative Rates Corn $600 $720 Oats $675 $743 Rough Rice $825 $908 Soybeans $1,550 $1,850 Soybean Meal $1,500 $1,650 Soybean Oil $650 $725 Wheat $1,150 $1,250 KC Wheat $1,200 $1,350 Minneapolis Wheat $1,350 $1,755 S & P 500 emini $5,050 $5,555 Live Cattle $1,500 $1,650 Feeder Cattle $2,800 $3,080 Lean Hogs $1,200 $1,320 12

13 CALENDAR OF EVENTS 04/30/18 7:30 AM CDT - PCE Prices & Core(Mar) 7:30 AM CDT - Personal Income & Spending(Mar) 9:00 AM CDT - Pending Home Sales(Mar) FN: May Copper(CMX) May Gold & Silver(CMX) May Platinum & Palladium(NYM) May Canola(CBT) May Wheat(CBT) May Oats(CBT) May Rough Rice(CBT) May Corn(CBT) May Soybeans,Soymeal,Soyoil(CBT) LT: Apr Fed Funds(CME) Apr Live Cattle(CME) May RBOB & ULSD(NYM) May Sugar-11(ICE) Apr Fed Funds Options(CME) May Lumber Options(CME) 05/01/18 9:00 AM CDT - Construction Spending(Mar) 9:00 AM CDT - ISM Index(Apr) 1:00 PM CDT - Auto & Truck Sales(Apr) 2:00 PM CDT - Fats & Oils 2:00 PM CDT - Cotton System 2:00 PM CDT - Grain Crushings 3:30 PM CDT - API Energy Stocks FN: May Orange Juice(ICE) May Sugar-11(ICE) LT: Apr Butter(CME) Apr Milk(CME) Apr Butter Options(CME) Apr Milk Options(CME) 05/07/18 2:00 PM CDT - Consumer Credit(Mar) 05/08/18 9:00 AM CDT - JOLTS-Job Openings(Mar) 3:30 PM CDT - API Energy Stocks LT: May Cotton(NYM) 05/09/18 6:00 AM CDT - MBA Mortgage Applications Index 7:30 AM CDT - Core PPI & PPI(Apr) 9:00 AM CDT - Wholesale Inventories(Mar) 9:30 AM CDT - EIA Petroleum Status Report 2:00 PM CDT - Dairy Products Sales 05/10/18 7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Core CPI & CPI(Apr) 7:30 AM CDT - Initial Claims-Weekly 9:30 AM CDT - EIA Natural Gas Report 11:00 AM CDT - WASDE Report & Crop Production 1:00 PM CDT - Treasury Budget(Apr) 3:30 PM CDT - Money Supply 05/11/18 7:30 AM CDT - Export(ex-ag) & Import(ex-oil) Prices(Apr) 9:00 AM CDT - Mich Sentiment(May) 05/02/18 6:00 AM CDT - MBA Mortgage Applications Index 7:15 AM CDT - ADP Employment Change(Apr) 9:30 AM CDT - EIA Petroleum Status Report 1:00 PM CDT - FOMC Rate Decision 2:00 PM CDT - Dairy Products Sales FN: May RBOB & ULSD(NYM) 05/03/18 7:30 AM CDT - USDA Weekly Export Sales 7:30 AM CDT - Int Trade In Goods(Mar) 7:30 AM CDT - Initial Claims-Weekly 7:30 AM CDT - Productivity-Prel(Q1) 7:30 AM CDT - Unit Labor Costs-Prelim(Q1) 7:30 AM CDT - Trade Balance(Mar) 13

14 COMPANY INFORMATION Midwest Market Solutions is the leading edge in commodity marketing and trading. Midwest Market Solutions was established in March of 2002 and is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O Brien. The firm specializes in individual trading strategies for the investor, personalized marketing programs for individual farm operations as well as full-service and discount broker services. The home office is located in Springfield, Missouri with branch offices in Yankton, South Dakota; Storm Lake, Iowa; Pocahontas, Iowa; Thief River Falls, Minnesota; Roseau, Minnesota; Omaha, Nebraska; Verona, North Dakota; Ennis, Montana and Watseka, Illinois. Midwest Market Solutions is committed to providing clients with the best information and service as possible. Midwest Market Solutions provides clients with written newsletters, trade research and hedging as well as trading advice. Brian Hoops is President and Senior Market Analyst of Midwest Market Solutions, Inc. Brian can frequently be heard on radio stations across the country including KAYL, KKIA, Ag News 890, Red River Farm Network, Your Ag Network, WHO Big Show and Commodity Wrap on Sirius XM radio. Brian can also be seen as a frequent guest on RFD-TV and heard on the Minneapolis Grain Exchange marketing hotline. Brian also writes several newsletters that are published throughout the Plains and the Midwest, covering the states of Iowa, Minnesota, North and South Dakota, Nebraska, Kansas, Montana, Wisconsin, Wyoming and Idaho. Brian has been quoted in the Wall Street Journal, Bloomberg, Reuters and Dow Jones newswires and U.S. Farm Report. Services available at Midwest Market Solutions: *Full Service Brokerage *Market Quotes and Trading Platforms *Twitter Feed *Discount Brokerage Service *Market Solutions Hedge Program *Text Marketing Service *Market Insider TV Commentaries *Market Insider Daily Newsletter Midwest Market Solutions does not necessarily take every trade recommendation listed herein. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown in fact there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses is material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance, results and all of which can adversely affect actual trading results. 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 Solutions s Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSES- SION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDI- RECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION. 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. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. Copyright 2018 Midwest Market Solutions, Inc. 14