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BRIAN HOOPS

By Staff | Mar 14, 2014

Crop price set

The average prices of November soybeans, December corn and September Minneapolis wheat futures have been determined.

Although not officially announced by the Risk Management Agency, these averages will serve as the projected prices for revenue insurance purposes.

The average price of November soybean futures was $11.36 per bushel, down $1.51 from last year.

December corn averaged $4.62 last month, down $1.03, and September spring wheat futures averaged $6.51 during February, $1.93 below a year ago.

CBOE fines

Nine months after regulators fined the Chicago Board Options Exchange for failing to police its members, the biggest U.S. options market approved a rule aimed at preventing fraud.

Firms trading at the unit of CBOE Holdings Inc. will be required to write down how they supervise their businesses, according to a Securities and Exchange Commission filing from the Chicago-based options exchange.

They must also carry out regular office inspections and send CBOE an annual report on regulatory practices. Stiffening oversight will help firms trading at the CBOE “prevent fraudulent and manipulative acts and practices and improve investor protection,” according to the document, which was posted on the SEC website.

CBOE was fined $6 million in June by the SEC after regulators said the exchange’s staff interfered with their investigation of illegal short selling at a member firm.

CORN ANALYSIS

Corn closed the week 24.5 centers higher from a week earlier.

Last week, private exporters reported a sale of 211,500 metric tons of corn to Japan and a total of 140,000 mt of corn to South Korea.

Weekly export sales of corn showed a total of 59.8 million bushels. Total annual exports total of 1.48 billion bushels are already 850 mb larger than last year.

At the current pace, the USDA’s export forecast of 1.6 bb looks to be raised in the future.

Commercial interests will view pullbacks in the market as buying opportunities with forecasts for a cool, wet spring could give way to flooding across the Midwest key growing regions during the heart of the growing season.

Thus commercial entities as well as large speculators will want to be long ahead of the growing season. Highs for corn are likely to be scored during the spring planting timeframe or very early summer as values rally to secure enough planted acres to meet demand.

As price levels rise, producers should be offsetting price risk by making cash sales and using options to manage the risk.

On weekly charts, corn has scored a technical breakout, which is attracting fund buying. Planting is underway down South with Texas corn planting reported at 8 percent complete, up 3 percent from the previous week and below the average pace of 9 percent.

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

Sell 15 percent at $5.24.

SOYBEANS ANALYSIS

Soybeans closed the week 44.5 cents higher from a week earlier.

Last week, private exporters announced a cancelation of 245,000 mt of soybeans previously sold to China.

Weekly export sales of soybeans showed a total of 28.4 mb for old crop and bringing total commitments to 1.623 bb, this is now 113 bb above the USDA’s current 2013/14 export projections.

The USDA is assuming foreign buyers will eventually cancel U.S. purchases in favor of cheaper South American product.

In the March 31 acreage report, the trade is expecting an increase in U.S. soybean seedings of 500,000 to 1 million acres.

If wet growing conditions materialize this spring as forecast, corn will rally to buy acres as the market anticipates farmers will shift corn acres to soybeans.

A very wet forecast will likely limit the upside for soybeans.

As with corn, technical breaks should be well supported by commercial entities as they begin to position long ahead of the growing season as they wish to extend coverage in case prices rally sharply on a weather-related event.

Soybeans are only beginning their breakout on the weekly charts and further upside is expected.

Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop. They re-owned 50 percent of the 2013/14 crop with $13.50 May calls and exited for an 89-cent profit.

Producers are 10 percent sold of 2014/15 production. Sell 15 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. Hoops can be reached at (605) 660-1155.

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