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BRIAN HOOPS

By Staff | Dec 5, 2014

CME Group Inc, the world’s largest futures market operator, should continue to develop strategies to detect an illegal manipulative trading practice known as “spoofing,” the U.S. Commodity Futures Trading Commission said. Spoofing involves rapidly placing orders to create the illusion of market demand. Unsuspecting traders are then tricked into buying or selling at artificial prices, only to later find that the orders were canceled.

The practice gained notoriety last month after high-frequency trader Michael Coscia was charged with manipulating commodity futures prices in the first U.S. federal criminal prosecution of spoofing. The CFTC recommended CME further address its surveillance of spoofing after the agency’s Division of Market Oversight reviewed rule enforcement at the New York Mercantile Exchange and Commodity Exchange Inc from July 1, 2012 to June 30, 2013. The exchanges are owned by Chicago-based CME. CME said it was reviewing the CFTC’s findings.

CORN ANALYSIS

Corn closed the week $.05 3/4 higher. Last week, private exporters reported sales of 109,736 mts of corn to Costa Rica and 232,000 mts of sorghum to an unknown destination.

Weekly export sales of corn showed corn sales of 37.2 mb. Annual corn sales stand at 849.5 mb, 132 mb less than a year ago. In the weekly crop progress report, US corn harvest was reported at 94% complete. This will be the last crop progress report of the year. Corn has rallied into major weekly resistance on the back of active fund buying, meanwhile commercials have sold into the rally. With over 2 billion bushels of ending stocks, prices need to move lower to stimulate more demand and usage. However, exports are below last year’s export pace and the latest rally does nothing to encourage more usage.

The USDA supply/demand report on Dec? 10 looks to lend little direction to prices, with no production adjustment and the USDA likely to lower demand forecasts by 15 to 25 mb. Fund buying is the most bullish driving force for prices with very little farmer hedge pressure until after the first of the year.

STRATEGY & OUTLOOK

Producers are 100 percent sold of the 2014/15 crop . Sold 10 percent of 2015 production. Sell 15 percent at $4.50 December.

SOYBEANS ANALYSIS

Soybeans closed the week 24 cents lower from last week. Last week, private exporters announced sales of 355,000 mts of soybeans to China and 174,000 mts of meal to Thailand.

Weekly export sales of soybeans showed sales of 54.6 mb, a marketing year low. Annual soybean sales are1.421 bb, 72.5 mb more than a year ago. In the weekly crop progress report, bean harvest is 97 percent complete.

This will be the last crop progress report of the year. Brazil and Argentina currently are planting their crops in nearly ideal growing conditions.

Note, Brazil and Argentina store little to no excess grain, as storage elevators are absent from the countryside, not like here in the U.S. Grain goes from field to port, which means they need to forward contract, or pre-sell their crop before it’s harvested to insure it doesn’t pile up on the farm. This means South America will post their price for beans under any U.S. price to insure they capture the export business, as there is nowhere to store it. From the start of the U.S. harvest in October until South American soybean harvest in March, the big demand window for U.S. soybeans as South American supplies are unavailable and the U.S. is the only port of origin for the world’s needs. China remains the world’s largest importer of soybeans as their growing economy demands high protein and oil contents. The USDA supply/demand report on Dec. 10 looks to lend little direction to prices.

STRATEGY & OUTLOOK

Producers are 100 percent sold of 2014/15 production. Sold 10 percent of 2015 production. Sell 15 percent at $10.95 November.

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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