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BRIAN HOOPS

By Staff | Jan 9, 2015

Reaches settlement

DuPont and Monsanto have agreed to settle patent infringement lawsuits. In the lawsuits, Monsanto claimed DuPont infringed on certain seed-chipping patents and DuPont claimed Monsanto infringed on patents dealing with seed processing. Terms of the settlement are not being disclosed.

Purchase on hold

Cargill has put the brakes on its proposed acquisition of Nutreco. SHV Holdings had already put in a purchase offer for the Dutch feed company when Cargill made a bid for the company last month.

The Nutreco board was recommending shareholders support the SHV takeover. In a statement, Cargill said it would no longer pursue this acquisition, but is open to building its

animal nutrition portfolio.

Firms fined

CME Group Inc. fined three Chicago-based proprietary trading firms for violations stemming from problems with automated trading systems.

The firms, 303 Proprietary Trading, Allston Trading and Traditum Group, had no immediate comment or declined to comment.

CME Group ordered 303 Proprietary Trading to pay $75,000 after an algorithmic trading group employed by the firm sent more than 27,000 messages in less than two seconds on the exchange operator’s electronic trading platform, known as Globex, according to a disciplinary notice.

The flood of messages in May 2013 caused the cancellation of about 2,000 orders and “resulted in the exchange initiating a port closure and a failure of a Globex gateway,” the notice said.

Allston and Traditum were fined $35,000 each. Allston suffered a software failure in October 2012 that allowed an automated trading system to enter excessive order and cancellation messages in Federal Funds futures over an hour, according to a disciplinary notice.

In November 2011, a malfunctioning automated trading system used by Traditum executed transactions in Canadian Dollar futures, causing a significant spike in volume, CME said in a notice, adding that the firm subsequently enhanced its risk control policies.

$100 million fine

The U.S. Commodity Futures Trading Commission said it fined MF Global Holdings Ltd. for wrongdoing during the collapse of the futures brokerage, but will continue its lawsuit against the firm’s former chief, Jon Corzine.

A federal judge in Manhattan approved a settlement in which the company will pay a $100 million fine and be jointly responsible for returning $1.21 billion in client funds that another unit had been ordered to restitute last year.

The parties agreed on the settlement earlier this month, though terms were not disclosed at the time.

The CFTC said its litigation would continue against former MF Global chief executive Corzine and former assistant treasurer Edith O’Brien.

If they do not settle, the former officials may have to defend themselves in court.

CORN ANALYSIS

Corn closed the week 18.5 cents lower.

Last week, private exporters reported sales of 157,500 metric tons of corn to Mexico and 210,000 mt to Japan.

Weekly export sales showed corn sales at 35.2 mb. Annual corn sales now have reached 1.06 bb and are now 44 mb behind a year ago.

This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2014 crop and update the demand figures.

Export forecasts are nearly identical to last year at this time. Traders are going to look for the USDA to increase its final 2014 corn production estimate, but cut harvested acreage and lower the supply forecast. They should also increase their demand estimates, slowly tightening the balance sheets.

Farmer selling should increase after the first of the year as farmers will need to move some corn to maintain the quality of the stored crop, but basis levels should narrow through the winter months.

Going into the spring, traders will want to buy a break in prices due to the reduced acres and the threat of adverse summer growing season sending prices sharply higher.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop. They sold 10 percent of 2015 production and could sell another 15 percent at $4.50 December.

SOYBEANS ANALYSIS

Soybeans closed the week 46.5 cents lower.

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

Weekly export sales of soybeans were 22.4 mb. Annual sales have now reached 1.556 bb, up 64 mb from a year ago.

The huge demand base for soybeans, estimated at record large overall and highlighted by record strong export demand and a very strong crush figure.

Ending stocks are forecast to tighten to near 425 mb. The market has been 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.

This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2014 crop and update the demand figures.

Export forecasts are nearly 60 mb above last year at this time and with the ongoing strong sales, look for USDA to again tighten balance sheets and increase exports.

Traders are going to look for the USDA to decrease its final soybean production estimate and to increase its demand estimates, slowly tightening the balance sheets.

Farmer selling looks to be at a minimum this winter as producers are more interested in selling corn and holding onto their soybeans in case another weather problem develops in South America and prices move higher.

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