×
×
homepage logo

BRIAN HOOPS

By Staff | Jan 24, 2014

CME Group Inc., owner of the biggest futures market, was sued by shareholders, who started with the exchange in the 1970s. They allege operational changes to their trading rights have diluted the value of their memberships.

“This is a breach-of-contract action seeking hundreds of millions of dollars in damages,” they alleged in a complaint filed last week in Cook County Circuit Court against CME and its Chicago Board of Trade unit.

Sheldon Langer and Ronald Yermack, who say they’ve been CME members since the 1970s, and Lance Goldberg, who claims he’s been a CBOT member since 2003, allege that they and their fellow old-line Class B members have lost free access and close proximity they formerly had to the CME’s Globex Electronic Trading platform.

Since CME’s 2012 opening of an electronic data center in Aurora, the men and their peers have been required to pay for that access. The exchange also has started directly marketing Globex access rights, bypassing the members’ ability to lease those rights, according to their complaint.

Such changes required the approval of Class B members, which CME never obtained, the traders said. While CME’s market capitalization has increased since the Aurora facility opened, as has the value of Class A shares, Class B shares have not kept pace, they said.

Laurie Bischel, a spokeswoman for the Chicago-based CME Group, declined to comment on the complaint. The CME members seek unspecified money damages for themselves and

their peers, plus a court order allowing them, or their lessees, free access and better proximity to the Aurora facility.

In a separate case in the same courthouse, about 20 CBOT traders who still work in that exchange’s open-outcry pits are seeking an order reversing a change in final trade settlement pricing from one entirely depending on trading floor pricing to one incorporating electronic trade data.

CORN ANALYSIS

Corn closed the week 7.25 cents higher. Last week, private exporters reported corn sales of 204,000 metric tons to Egypt and canceled a previously reported sale of 126,000 mt of corn to an unknown destination.

Weekly export sales of corn showed a total of 32.3 million bushels, above the 11 mb needed each week to reach the USDA forecast.

Total annual exports total of 1.16 billion bushels represent 80 percent of the USDA’s export of 1.45 bb.

With supply now finalized and indications of improved demand, the January supply/demand report should mark the low for prices and a shift in sentiment, even though the supplies remain ample.

We can expect the market to find some short covering and try to rally, especially if traders unwind corn-soybean spreads.

Corn has been entrenched in a downtrend and looks to remain in an overall negative chart pattern with the fundamentals decidedly bearish.

Funds meanwhile should look to buy back some short positions ahead of the planting and growing season, allowing corn to have some short-lived rallies.

Many producers are nervous about the upcoming growing season, wanting to get some hedges in place.

Patience this year should provide selling opportunities.

Strategy and outlook: Producers are 100 percent sold of 2013/14 crop. Producers are 10 percent sold of the 2014/15 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 38.75 cents higher from last week. Last week, private exporters reported a total of 711,500 mt of soybeans sold to China.

Weekly export sales of soybeans showed a total of 25.8 mb.

Exports should improve next week with strong private sales reflected in the total.

Total export sales of 1.523 bb exceed the USDA forecast of 1.495 bb.

The weekly charts show soybeans have rallied to the weekly downtrend line, which should provide stout resistance.

However, if dry weather continues in South America, this resistance will be broken and prices should explode higher.

The USDA is forecasting old crop ending stocks at a tight 150 mb, assuming China is going to eventually cancel U.S. purchases and shift demand to South America.

If the South American crop is threatened due to drought, China will not be able to meet its needs with South American soybeans and remain buyers of U.S.

soybeans.

This will give producers some golden marketing opportunities for both old and new crop soybeans.

Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop. Producers are 10 percent sold of 2014/15 production. Sell 10 percent at $12.10.

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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page