×
×
homepage logo

BRIAN HOOPS

By Staff | Nov 12, 2014

MGEX up

Minneapolis Grain Exchange reported it has concluded the second best October in its long history.

The Exchange reports a total volume of 169,824 trades for the month, the highest October total since the record-setting month in 2007 and a 38 percent increase over last year’s total.

This marks the 10th-straight month that MGEX has reported a volume of more than 140,000 trades, including every month of 2014.

It’s also the 15th month in a row that MGEX has reported year-over-year volume growth. A new total electronic volume record was set for October, with 147,516 trades.

Total volume for the calendar year is now 1.81 million trades, a 50 percent increase from this time a year ago.

Open interest concluded the month at 69,467 trades, which is also a 14 percent increase from 2013.

Bunge Ltd. down

Bunge Ltd, one of the world’s largest agricultural trading houses, defended its risk strategies as it reported lower-than-expected third-quarter earnings and revenue because of hedging losses and limited farmer selling. The New York-based company suffered as farmers in North and South America, dissatisfied with falling commodity prices, held on to their crops rather than sell them to processors.

In Brazil, Bunge said it experienced its lowest level of forward selling of new crops in years, while Argentine farmers were holding soybeans as a hedge against inflation and currency devaluation. Slow farmer selling has kept crop supplies tight despite massive U.S. harvests and prevented processors like Bunge from replenishing their inventories.

Revenue slid to $13.67 billion from $14.7 billion. Analysts had expected $15.33 billion.

Results were “well below consensus” and likely to weigh on Bunge’s stock price, JPMorgan analyst Ann Duignan said. Bunge shares are up 3.5 percent this year, compared to 5.6 percent gains for rival Archer Daniels Midland Co.

Bunge said it suffered about $80 million in temporary hedging losses in its North American and European oilseed processing and distribution businesses. Still, the company, one of the world’s top oilseed processors, “managed the complicated crop transition in North America well,” according to its statement. It expects about $60 million in reversals in the fourth quarter.

“Our risk strategies were successful in both grains and oilseeds,” the report said.

Bunge, along with ADM, Cargill Inc and Louis Dreyfus Corp., comprise the four large players called the “ABCD” that dominate the flow of agricultural commodities around the world.

CORN ANALYSIS

Corn closed the week 9 cents lower last week and private exporters did not report any private sales.

Weekly export sales of corn showed corn sales of 19 million bushels, and for the second consecutive week, the smallest sales in this marketing year.

In the weekly crop progress report, the U.S. corn harvest was reported at 65 percent complete. This compares to 46 percent last week, 71 percent last year and 73 percent on average.

Plenty of carry is offered this year, giving producers an incentive to place corn into storage with the opportunity to earn a higher price later.

Unfortunately, the current fundamental situation does not indicate the corn market will be able to meet the carry being offered.

Thus, producers should sell the carry if they have on-farm storage and look to re-own later if fundamentals change.

Harvest is nearly completed and yield estimates continue to trend higher and the November supply/demand report will likely show a larger corn crop compared to a month ago.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop and sold 10 percent of 2015 production.

SOYBEANS ANALYSIS

Soybeans closed the week $3.75 lower from last week, while private exporters reported sales totaling 252,000 metric tons to China and 110,500 mt to an unknown destination.

Weekly export sales of soybeans showed sales of 59.2 mb.

In the weekly crop progress report, the U.S. soybean harvest is 83 percent complete versus 85 percent one year ago, and versus the 5-year average of 83 percent.

Last week farmers were 70 percent complete.

Harvest is nearly completed in the majority of the Corn Belt. Yield estimate continue to trend higher and the November supply/demand report will likely show a slightly larger soybean crop compared to a month ago.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.

Demand for U.S. soybeans is forecast to be record large and it will need to be with the growing carryover stocks that are forecast.

The market will be anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.

Weather during the South American growing season will be closely watched.

Strategy and outlook: Producers are 100 percent sold of 2014/15 production and sold 10 percent of 2015 production.

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. Past performance 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