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BRIAN HOOPS

By Staff | Mar 13, 2015

Record sales

Land O’Lakes Inc. is reporting annual net earnings of $266 million on record sales of $15 billion for 2014.

Land O’Lakes said net earnings were down 13 percent from a year earlier. Cash dividends returned to members was a record $184 million, up 25 percent from the previous

year.

For the fourth quarter, which ended Dec. 31, Land O’Lakes reported net earnings of $38.3 million on quarterly revenue of $3.5 billion.

Probation only

A Chinese immigrant who stole trade secrets from the Chicago Merc worth an estimated $50 million was spared prison by a federal judge who cited his otherwise exemplary life.

Chunlai Yang, 50, of Libertyville, was instead sentenced to four years probation for stealing software that underpinned the CME Group’s Globex trading platform.

Yang, who worked as a high-ranking programmer for the Merc from 2000 until his arrest in 2011, pleaded guilty in 2012 to the theft, admitting he was trying to create a similar product in China when he illegally downloaded more than 10,000 computer source code files.

Near-record trade

MGEX has recorded the second-best month in its storied history, reporting a total volume of 221,410 from February.

MGEX also saw its electronic volume from February finish the month at 197,456, making it the highest electronic volume month ever for the Exchange.

February’s conclusion marks the seventh-consecutive month that MGEX has recorded a total volume of more than 150,000.

Total volume from February increased by 8 percent over that of February 2014.

Total calendar year volume now stands at 392,842, which is 2 percent higher than than that of this time last year.

Open interest following Friday’s activity was 70,352.

CORN ANALYSIS

Corn closed the week 5.5 cents lower.

Last week, private exporters reported a sale of 108,000 metric tons of sorghum to an unknown destination.

Weekly export sales showed corn sales at 32.6 million bushels. Annual corn sales now have reached 1.402 billion bushels and are now 75 mb below a year ago.

Traders are anticipating a decrease in planted acreage in USDA’s March 31 report of 1 to 3 million acres.

Corn should find strength in the last half of March and early April as the market will need to secure more acres to meet record demand.

Commercial interests will view pullbacks in the market as buying opportunities, as will large speculators. Both groups will want to be long ahead of the growing season as spring planting and summer growing season always brings price volatility.

As price levels rise, producers should be offsetting price risk by making cash sales and using options to

manage the risk.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop. They sold 10 percent of 2015 production. They should consider selling 15 percent at $4.65 December.

They bought calls to re-own 50 percent of previous sales.

SOYBEANS ANALYSIS

Soybeans closed the week 45.25 cents lower.

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

Weekly export sales of soybeans were 18.4 mb. Annual sales are record large at 1.75 bb, up 128 mb from a year ago.

Traders expect the USDA’s supply/demand report secudueled for release on March 10, will show very little change in U.S. ending stocks.

With the South American growing season effectively over, as well as an expectation for an increase in U.S. seeded acres in 2015, look for prices to work lower after the report.

In the March 31 acreage report, the trade should be expecting an increase in U.S. soybean seedings of 500,000 to 1 million acres. If corn tries to rally to buy acres this spring, currently the market is anticipating farmers will shift corn acres to soybeans, look for soybeans to rally as well.

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.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. They sold 10 percent of 2015/16 production. They should consider selling another 15 percent at $10.95 November.

They bought calls on 50 percent of 2014/15 production to re-own previous sales.

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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