agresource company · 7/26/2019 · 2013 - 2017 average. tr ade negotiations ar e to resume monday...

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** AgResource Central US Weather Discussion ** Jul 26, 2019

4:30 PM CDT

** Wetter Pattern Ahead; Timing Uncertain: The EU and GFS models are in broad

agreement that soaking rainfall impacts the heart of the Corn Belt into

August. Key differences remain, however. The EU model allows meaningful rain

to begin August 3rd

. The GFS delays this shift until Aug 6-7. Both models

indicate that a more zonal

upper air unfolds. Confidence

is rising with respect to

needed rainfall impacting the

Corn Belt during pollination.

The EU model’s latest 10-day

precip forecast is attached.

Moderate rainfall will move

across SD, MN and WI late in

the coming weekend. Normal

temps and only lite/scattered

showers are forecast

elsewhere.

Verification data again

suggests the EU model will

likely be the best performer,

and so better rain chances

unfold next weekend.

** AgResource Farm Marketing Advice ** Jul 26, 2019

4:30 PM CDT

** AgResource Farm Marketing Advice for Monday: 1/ Corn Producers: Sell 20% of

the 2021 corn crop at $4.24 and 20% at $4.29 basis Dec 2021 corn futures. This

would price 60% of the 2021 corn crop.

Managed funds on Tuesday were

long a net 127,000 contracts of

corn, wheat and soy combined.

This is down 41,000 contracts

from the prior week. Supply

bulls in recent weeks have not

been rewarded for maintaining

long positions. The August Crop

Report could provide a jolt to

the markets, but it’s key for

the bulls that NASS really take

an ax to US row crop yields and

acres. If production changes are

only modest, additional

liquidation occurs into harvest.






** 2019 County Level Market Facilitation Payments ** Jul 26, 2019 4:30 PM CDT

MFP $/Acre15 to 2525 to 3535 to 4545 to 5555 to 6565 to 7575 to 8585 to 9595 to 105105 or more

** AgResource Central US Weather Discussion ** Jul 26, 2019

4:30 PM CDT

The North American jet stream beginning next Fri/Sat will flow directly

aloft the Eastern Plains and Midwest. Heavy moisture will be pulled into the

region Aug 2-5, which will mostly replenish soil moisture across the driest

areas of E IL and IA. The GFS also features a pattern of soaking rainfall

across the Plains and

Midwest August 5-10.

Timing will be important,

but key is that better

rains will occur in a

timely fashion.

The graphic attached

shows NOAA’s updated 8-14

day precip anomaly

forecast. There’s general

consensus in the weather

community that the first

half of August will be

much wetter than normal.

No threatening heat is

indicated. The market’s

perception of crop threats

is down the length of the

growing season.






** 2019 County Market Facilitation Payments ** Jul 26, 2019 4:30 PM CDT

US ag exports to China were on a downhill slide before China imposed

tariff’s on US ag products in 2018. Note in the chart that first-quarter

exports had been 25% below the 5-yr average, but the summer tariffs prevented

a typical late-year rally. The export rate in the first five months has

improved from late 2018, as China made some goodwill purchases through the

negotiation process early in the year. Negotiations broke down this past

spring and exports dropped in April, but rebounded in May. However, the Jan-

May export total of $4.3 Bil was still $1.9 Bil (30%) less than a year ago,

and $3.6 Bil (45%) less than the

2013-2017 average.

Trade negotiations are to resume

Monday, with Trade Representative

Lighthizer and Treasury Secretary

Mnuchin to resume talks in Shanghai

at the request of Chinese

negotiators. After more than a year

of such back and forth, the CBOT soy

trade is not holding out much hope

for significant progress. US

agricultural producers are hopeful

that China will soon remove tariffs,

and to again have access to a

currently closed market.

** 2019 County Level Market Facilitation Payments ** Jul 26, 2019 4:30 PM CDT

On Thursday, the USDA began releasing details of the 2019 Market

Facilitation payments. Payments will be made to producers of non-specialty

crops such as corn, soybeans, wheat, and others, along with some specialty

corp producers that includes some fruits and nuts.

The non-specialty crop payment is based on a single county payment rate

multiplied by a farm’s total planting in 2019. Prevent plant acreage will

qualify for a $15 payment - if the acreage is planted to a cover crop by Aug 1

Dairy producers are to receive a $.20/cwt payment, while hog producers will

take an $11/head payment. Tree nut producers will take the largest per acre

payment of $146/acre.

The application process begins Monday, July 29th

at local USDA service

centers. Payments were assessed at a minimum value of $15/acre and capped at

$150/acre. The first payment will be calculated as the higher of either: 50%

of producers calculated payment, OR $15 acre. The first payment will be made

in mid to late August. A second payment is scheduled for November and a third

in early January. Both of those payments are contingent on a review of market

conditions and international trade opportunities by the USDA.

The map on the previous page reflects the county level payment rates that

were evaluated by the USDA and made available on Thursday. Payments across the

Central Midwest look to range from $45/acre up to $90/acre. Not a single

Cornbelt county looks to receive the maximum payment.

There were a total of 22 counties scheduled to receive the maximum $150/acre

payment, and all of those counties were located in Southern states.






** AgResource Corn Comment and Analysis ** Jul 26, 2019

4:30 PM CDT

** Corn Testing Chart-Based Support; Model Guidance Stays Wet in US: CBOT corn

futures fell another 3-4 cents. Key technical support lies just below the

market, and it’s important that Sep corn hold $4.10 support. Otherwise further

weakness of 10-15 cents can be expected prior to the USDA’s August report.

Managed money as of Tuesday was long a net 153,000 contracts, a bit more

than expected. ARC estimates that fund length this evening is closer to

125,000 contracts. Key next week will be whether the spec community opts to

maintain sizable market length

amid favorable weather during

pollination?

The latest run of the EU model

maintains widespread soaking

rainfall in IA, MO, IL, IN and

KY. Regional totals are pegged as

high as 2-3”. If realized, yield

potential will be rising, not

falling, from prior expectations.

ARC’s strategy into the Aug

USDA report is to use moderate

rallies to catch up on 2019 and

2020 sales. There’s a risk that

WASDE’s US balance sheet in July

is little changed.

** AgResource Soybean Comment and Analysis ** Jul 26, 2019

4:30 PM CDT

** Soybeans Trade Quietly Lower Ahead of the Weekend: Quiet trade unfolded at

the CBOT through Friday, that left futures less than a penny lower for the day

and on the lows of the session. End of week market news was limited, so the

trade keyed off of the wetter extended-range weather forecast for direction.

The Commitment of Traders report showed that for the week ending Jul 23,

managed funds bought nearly 2,900 contracts of soybeans, sold just over 2,400

contracts, reducing their net short position by nearly 500 contracts. Note

that in the last 5 weeks that neither the bulls or the bears have been willing

to change their position significantly. Bullish traders have used breaks to

add to their long position, and bearish traders have been sellers on rallies.

This has kept the CBOT in a broad

trading range. Overall, Managed Money is

net short over 38,000 contracts.

Producers remain limited sellers on

new crop, with new crop short hedges

totaling just 1.2 Bil Bu, or the lowest

figure since 2014.

Our view is that wide-ranging CBOT soy

trade continues into the August crop

report, which will hopefully add more

clarity for US production potential. We

continue to advise sales on strong

rallies in the coming weeks.






** AgResource Farm Hedge/Cash Positions ** Jul 26, 2019

Date Position %Hedged Explanation Exit/Stop

===============================================================================

------------------ 2017/18 AgResource Cash Sales Advice ----------------------

Corn: Sold 100% of production at $4.055 average spot CBOT.

Soybeans: Sold 100% of production at $9.9075 average spot CBOT.

Wheat: Sold 100% of production at $5.2625 average spot CBOT.

-------------------2018/19 AgResource Cash Sales Advice ---------------------

Wheat Sold 100% of estimated production at $5.21 average spot CBOT.

Corn: Sold 100% of estimated production at $4.195 average spot CBOT.

Soybean: Sold 100% of estimated production at $9.76 average spot CBOT.

Diesel: Covered 100% of 2019 Diesel needs at $45.00 spot WTI crude oil.

Livestock Feeders: Covered 50% of corn feed needs at $3.77 basis July futures

through September.

------------------- 2019/20 AgResource Cash Sales Advice --------------------

Corn: Sold 60% of estimated production at $4.35 basis December ‘19 futures.

Wheat: Sold 70% of estimated production at $5.48 July/Dec ‘19 futures.

Soybeans: Sold 70% of estimated production at $9.53 basis January ’20 futures.

--------------------- 2020/21 AgResource Cash Sales Advice ------------------

Corn: Sold 60% of estimated production at $4.18 basis December ’20 futures.

Soybeans: Sold 50% of estimated production at $9.45 basis November ’20 futures.

Wheat: Sold 60% of estimated production at $5.40 basis July ’20 Chicago.

--------------------2021/2022 AgResource Cash Sales Advice -------------------

Corn: Sold 20% of estimated production at $4.19 basis December ’21 futures.

** AgResource Wheat Comment and Analysis ** Jul 26, 2019

4:30 PM CDT

** Wheat Ends Weak; Russian Crop Stabilizing: CBOT wheat futures fell 3-4

cents. European wheat futures also ended slightly weaker, and the battle for

nearby world market share continues.

ARC’s Black Sea contacts suggest the Russian wheat crop should stabilize at

74-76 MMTs following higher than expected official government data in key

winter wheat producing regions. Solid yields are being reported in France

despite summer wheat and dryness. Additional meaningful cuts to major exporter

production are not anticipated.

ARC does mention that Russia’s

domestic wheat is beginning to firm

as the end of harvest approaches.

Values in key regions this week are

flat to marginally weaker.

Seasonal trends suggest a bottom

in the world wheat market is close.

However, funds in the Chicago on

Tues were long 12,000 contracts,

and so additional liquidation risk

persist. Rallies will be limited as

too much supply chases too little

demand in the near term. Sep CBOT

will trade between $4.80-5.10 into

expiration.






** AgResource Hog Comment and Analysis ** Jul 26, 2019

4:30 PM CDT

** Hogs Futures Close Higher In Very Quiet Trade: CME hog futures finished the

week with a very quiet session that left futures contracts higher across the

board. Wide premiums to the cash market continue, but the CME’s lean hog index

advanced $1.65 on Friday to $77.23 for the largest 1-day increase since early

April. Based on Thursday’s slaughter data, we estimate $1.63 higher for Monday.

The negotiated weaned pig market remains largely a function of forward hog

feeding margins, which after surging to record levels in the 2nd

quarter, have

been near average levels in the last several weeks. The shift to marketing

against the Feb contract this week puts

the nearby hog crush spread at $99/head

or nearly double a year ago.

Weaned pig prices bottomed in early

July at $32/head and have inched higher

in recent weeks. The USDA quoted an

average price this week of $35.36/head

versus $17 last year, and the most

highest late July quote since 2014.

Such prices are helping cushion the

normal seasonal drag on profits for the

farrow-to-wean industry and looks to

keep industry expansion plans in place.

We expect that US herd expansion will

continue at least into early 2020.

** AgResource Ag Investment Trades ** Jul 26, 2019

4:30 PM CDT

----- 715 Closed Trades since March 1, 2004 for a net gain of $292,341.50 ----

** AgResource Ag Speculative Advice for Monday: 1/ Sell 2 December 2020

corn futures at $4.24. Stops on a close above $4.40.

“Entry Date" "Positions and Current Open Position Recommendations"

------------- -------------------------------------------------------------

5/29/19 Long 2 Dec ’21 corn/short 2 Dec ’20 corn at a 1 cent Dec

’21 premium. Hold.

6/03/19 Long 2 Dec ’21 corn/short 2 Dec ’20 corn at a 6 cent

December ‘20 premium. Hold.

6/14/19 Long 2 November $8.40 soybean puts at $.15. Hold.

agresource company · 7/26/2019 · 2013 - 2017 average. tr ade negotiations ar e to resume monday...

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