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BRIAN HOOPS

By Staff | Mar 21, 2014

A federal judge ordered former Goldman Sachs bond salesman, Fabrice Tourre, to forfeit a $175,000 bonus and pay a $650,000 fine for misleading investors in the run up to the 2008 financial crisis.

A jury in August found Tourre guilty of defrauding investors in one of the few cases in which a Wall Street executive faced a trial in connection with actions regulators said contributed to the economic meltdown.

Tourre was charged by the Securities and Exchange Commission with lying to investors, while marketing a complicated investment product called a collateralized debt obligation filled with shaky mortgage loans that Tourre knew would likely plunge in value.

U.S. District Judge Katherine Forrest ordered Tourre to turn over the $175,463 in bonus money and prohibited him from seeking reimbursement from Goldman Sachs for the $650,000 fine.

Specifically, the SEC claimed that in 2007 Tourre, then a 28-year-old vice president with Goldman, worked with hedge fund guru John Paulson to create an investment product called Abacus 2007 AC-1 loaded with mortgage-backed securities that both Tourre and Paulson expected to sour.

Tourre was accused of failing to reveal Paulson’s role and, moreover, not telling investors that Paulson was betting the securities would tank.

Tourre became notorious partly due to an e-mail he sent to a former girlfriend in which he not only referred to himself as “Fabulous Fab,” but also seemingly made light of his role creating investment products at Goldman that were bound to fail once the U.S. housing market collapsed.

Brazil harvest

CONAB cut Brazil’s corn production estimate to 75.2 million tonnes versus its February estimate of 75.47million tonnes.

This compares to the latest USDA projection of 70 million tonnes.

CONAB cut Brazil’s soybean production to 85.44 million tonnes versus its previous estimate of 90.1 million tonnes.

CORN ANALYSIS

Corn closed the week 2.5 cents lower. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 26.9 million bushels. Total annual exports total of 1.505 billion bushels are already 850

mb larger than last year.

The current pace is already 93 percent of the newly updated USDA annual forecast. USDA’s March crop report provided little fanfare.

In the report, exports were increased by 25 mb. The carryout was cut accordingly to 1.456 bb. Both numbers came as no surprise.

Average corn price is pegged at $4.25 to $4.75. Commercial interests will view pullbacks in the market as buying opportunities in the next two weeks with forecasts for a cool, wet spring across the key growing regions during the planting 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 summer with a weather premium added in the spring.

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.

Strategy and outlook: Producers are 100 percent sold of 2013/14 crop.

Producers are 10 percent sold of the 2014/15 crop. Sell another 15 percent is December futures hit $5.24.

SOYBEANS ANALYSIS

Soybeans closed the week 69 cents lower from last week. Private exporters did not announce any private sales.

Weekly export sales of soybeans showed only 4.2 mb for old crop and bringing total commitments to 1.627 bb,

which is 106 percent of the USDA’s new 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 monthly supply/demand report, USDA raised exports by 20 mb and imports by 5 mb, then cut crush 10 mb resulting in a carryout of 145 mb, a net drop of only 5 mb from the previous month.

Average soybean price was pegged at $12.20 to $13.70. USDA cut the world soybean carryout to 70.64 million metric tons, down from 73.01 mmt last time.

Brazil’s crop was put at 88.5 mmt and Argentina was unchanged at 54 mmt. Chinese imports were left unchanged at 69 mmt.

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 wet forecast will likely limit the upside for soybeans.

Like 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.

Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop. They should re-owned 50 percent of the 2013/14 crop when prices reach $13.65.

Producers are 10 percent sold of 2014/15 production. Sell another 15 percent if November futures hit $12.50.

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. Brian Hoops can be reached at (605) 660-1155.

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