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BRIAN HOOPS

By Staff | Oct 18, 2013

Ohio auction

A 233-acre farmland auction in Ohio’s Van Wert County on Monday brought $3.275 million, or

$14,055 per acre, according to Schrader Real Estate and Auction Company, which marketed

the property and conducted the auction.

“We believe this may be a new record for the county, and it certainly shows that Midwestern farmland values continue to be strong,” said Jerry Ehle, company

sales manager. “We had healthy participation by both farmers and investors, and once bidding opened, it moved quickly past $3 million.

“Our high bidder was an investor from the Netherlands,” he said.

R.D. Schrader, president of the auction company, said farmers and investors alike appear to be taking a long-term approach to farmland values. He notes that operators

and investors who are buying for the long term don’t worry too much about whether prices are up or down month to month.

“They are more concerned about location, soils, and other farm-specific factors,” he said.

Beef ban

A Texas plant operated by Brazilian meatpacker JBS SA has been deemed ineligible for export to South Korea, after the country found a banned feed additive in meat supplied

by the facility.

The ban prohibits beef and beef products processed by a facility in Cactus, Texas that belongs to Swift Beef Company – a subsidiary of JBS SA’s U.S. arm JBS USA –

which were loaded on ships on or after Oct. 9 from entering South Korea.

The U.S. Department of Agriculture’s Food Safety and Inspection Service updated the export requirements for Korea to reflect the change.

A probe on Sept. 24 found zilpaterol, a controversial feed ingredient known by the brand name Zilmax, in 22 tons of beef imported by Swift Beef Co.,

South Korea’s Ministry of Food and Drug Safety said.

South Korea accounts for about 11 percent of U.S. beef exports, according to data from the U.S. Meat Export Federation, an industry group.

CORN ANALYSIS

Corn closed the week $.10 lower. Last week, private exporters did not report any private sales.

No weekly export sales or crop progress reports this week due to the government shutdown.

With the shutdown and not providing any crop progress or supply/demand figures, the trade is looking to the private sector for information. Private forecasters and producers who are combining corn are confirming larger yield potential compared to the September production figures and, in some cases, much larger than previously forecasted yields.

Thus, the corn market looks to find hedge pressure as harvest progresses during October. This is the main harvest month for corn and when prices should find the most selling pressure from producers who don’t have enough on-farm storage. Producers have been aggressively adding on farm storage, which may limit the pressure.

With the larger production figures, reasonable downside targets look to be $4.07 and long term support of $3.87.

This is where producers should look to lift hedges.

Strategy and outlook: Producers are 50 percent sold of 2013/14 crop and own the December 560 strike puts on 50 percent of production.

Exit at $4.10. Producers are 10 percent sold of the 2014/15 crop.

SOYBEANS ANALYSIS

Soybeans closed the week $.28 1/4 lower from last week. Last week private exporters did not report any private

sales.

No weekly export sales or crop progress reports were issued this week due to the government shutdown.

With the shutdown, and the lack of harvest progress info as well as the lack of supply aand demand info from the USDA, private sources and producers are providing most of the trading information.

Soybean producers are uncovering more yields that are larger than expected. Harvest pressure combined with the larger-than-expected yields are weighing on soybean prices.

Also, with the harvest progressing, some of the large premium that November was holding is being removed.

November and January still have a carry being offered compared to storing soybeans into the summer, so storing soybeans at harvest makes no financial sense.

Strategy and outlook: Producers are 60 percent sold of the 2013/14 crop and own the November 1260 put options on 50 percent of production. Exit puts at $12.60. November.

Sell 20 percent of 2013/14 production at $13.07 against January. Producers are 10 percent sold of 2014/15 production.

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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