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BRIAN HOOPS

By Staff | Apr 11, 2014

CME Group, the world’s leading and most diverse derivatives marketplace, announced last week that March’s trade volume averaged 14.1 million contracts per day, up 13 percent compared with March 2013.

Total volume for March was more than 295 million contracts, of which 86 percent was traded electronically. CME Group interest rate volume averaged 7 million contracts per day in March, up 35 percent from March 2013.

Eurodollar futures volume averaged 2.8 million contracts per day, up 47 percent from the same period a year ago. Eurodollar options volume averaged 916,000 contracts per day, up 132 percent from March last year.

Treasury futures volume averaged 2.7 million contracts per day, up 10 percent compared with March 2013. Treasury options volume averaged 604,000 contracts per day, up 33 percent from the same period last year.

In addition, the Minneapolis Grain Exchange, announced the best March volume in the Exchange’s 133-year history.

Total hard red spring wheat and apple juice concentrate futures and options contracts traded a total of 170,400 contracts, surpassing the previous March record set in 2011 by nearly 10 percent.

This places March at number 22 on the total Exchange monthly volume records. Electronic volume also hit a record high with 147,205 electronic trades, almost 8 percent over the previous March record set in 2011.

March rounds out the top 10 electronic monthly volume records.

The first quarter of 2014 has been the best on record, with year-to-date volume 73 percent higher than last year after the first quarter.

Open interest finished at 79,133 contracts. The last seven trade days of March all made the daily Exchange open interest records, with the peak at the No. 2 spot on March 27, just shy of the all-time record set on Feb. 5.

CORN ANALYSIS

Corn closed the week 10.75 cents higher. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 55.4 mb. Total annual exports total of 1.589 bb are now 94 percent of

the current USDA export forecast.

Corn has scored a technical breakout, but has failed to extend the rally as commercial selling limited gains.

If prices pullback, look for the commercials to become buyers as they 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 weather premium added in the spring.

In the quarterly stocks and acreage report, the USDA reported March 1 corn stocks at 100 million bushels less than trade expectations at 7.01 billion bushels versus 5.4 bb.

Trade was expecting 7.11 bb.

USDA’s estimated 2014 corn acreage at 91.7 million acres is the smallest since 2010. The average trade guess was 92.9 ma versus 95.4 ma last year.

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

They should sell another 15 percent at if December futures reach $5.24.

SOYBEANS ANALYSIS

Soybeans closed the week at 36.5 cents higher from last week. Last week, private exporters did not report any private

sales.

Weekly export sales of soybeans showed 0.4 mb for old crop, bringing total commitments to 1.633 bb, and

are 107 percent of the USDA’s new 2013/14 export projections.

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

However, we have never seen net cancelations in the second half of a marketing year. 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.

In the quarterly acreage and stocks report, USDA projected record large soybean acres at 81.5 million acres, a 4.54 ma increase over last year.

Soybean stocks were similar to last year at this time with 992 million bushels versus an average trade guess of 989 mb.

There is no reason to believe the market has scored annual highs yet. Prices need to rally to ration the old crop stocks.

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

They should re-own 50 percent of the 2013/14 crop when prices reach $13.78.

Producers are 10 percent sold of 2014/15 production. They should 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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