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BRIAN HOOPS

By Staff | Sep 11, 2014

More grain volume

The International Grains Council has increased its global wheat and corn production forecast for the 2014/15 crop.

IGC raised global wheat production 11 million tons to 713 million, citing increased harvested acreage in Russia and the European Union and better yields in China.

IGC also raised global corn production by 4 million tons to 973 million tons.

Trading volumes

MGEX, announced a total volume of 199,512 from August, the 10th-highest monthly volume in the exchange’s history, and a 17 percent increase over the total volume from August 2013.

It is the highest volume during the month of August since 2010. Total electronic volume during August was 167,454, the eighth-highest monthly total ever and the highest during the month of August since 2010.

It also marks a 22 percent increase over the total electronic volume from August 2013. Open interest at the end of August was 60,787, which is 66 percent higher than it was at the end of August 2013.

Total calendar year-to-date volume is up 56 percent when compared to this time last year, currently standing at 1,487,275.

Also, CME Group, the world’s leading and most diverse derivatives marketplace, announced that August 2014 volume averaged 13 million contracts per day, up 7 percent from August 2013.

Total volume for August 2014 was more than 273 million contracts, of which 87 percent was traded electronically.

This includes a record 52 percent of options traded electronically. CME Group open interest hit a record level of 105.6 million contracts on Aug. 14 and stands at approximately 103.7 million contracts at the end of the month, up 3 percent from the end of July, and 24 percent year-to-date.

CME Group agricultural commodities volume averaged 1.1 million contracts per day in August, down 5 percent compared with the prior-year period.

CORN ANALYSIS

Corn closed last week 9.25 cents lower.

Last week, private exporters announced sales of 120,000 metric tons of corn to an unknown destination.

Weekly export sales of corn showed corn sales of 20.7 million bushels.

In the weekly crop progress report, U.S. corn conditions were up 1 percent to 74 percent good-to-excellent versus 56 percent last year and the five-year average of 54 percent.

However, grain development continues to lag with 53 percent in dent stage versus 59 percent average.

The USDA was scheduled to provide traders with the next glimpse of market information on Thursday with the monthly supply/demand data.

The trade was looking for the USDA to slightly increase its production figure due to good early-harvest data.

The USDA should be conservative with its estimate as it will most likely wait until more yield data arrives in prior to making a major adjustment to its crop estimates.

Rich Feltes, from RJ O’Brien, said prior years of record U.S. corn yields posted August-to-harvest gains of 3 percent to 8 percent, suggesting a final 2014 U.S. corn yield from 172 to 181 bushels per acre versus USDA’s August yield of 167.4 bpa. The September-to-harvest corn yields advanced 10 to 11 bpa in record yield years of 1994 and 2004.

Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and own December puts on 75 percent of the crop.

They should exit at $3.25.

SOYBEANS ANALYSIS

Soybeans closed last week 4.25 cents lower.

Last week, private exporters did not report any private sales.

Weekly export sales of soybeans showed sales of 31.9 mb.

In the weekly crop progress report, the U.S. soy rating was up 2 percent to 72 percent G/E versus 54 percent last year, and five year average of 55 percent.

Five percent of the crop is dropping leaves versus 7 percent average.

Soybean rating is the second highest ever for early September, exceeded only by 1994.

The USDA was scheduled to provide traders with the next glimpse of market information on Thursday with the monthly supply/demand data.

The trade was looking for the USDA to slightly increase its production figure due to good early-harvest data.

The USDA should be conservative with its estimate as it will most likely wait until more yield data arrives in prior to making a major adjustment to its crop estimates.

Rich Feltes, from RJ O’Brien, said record U.S. soybean years posted August-to-harvest gains of 5 percent to 10 percent, suggesting a final 2014 U.S. soy yield from 47.7 to 50 bpa versus USDA’s August yield of 45.4 bpa. Meanwhile, September-to-harvest soybean yields improved from 3 to bpa in the same years.

Strategy and outlook: Producers are 25 percent sold of 2014/15 production. Producers own puts on 75 percent of the crop.

They should exit at $8.75.

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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