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BRIAN HOOPS

By Staff | May 8, 2015

Market limits change

The CME Group has reviewed the markets and changed some of its daily price limits.

The daily limit on corn futures is increased from 25 cents to 30 cents a bushel.

Chicago wheat futures, now at 35 cents, will have a daily limit of 40 cents.

The daily limit for soybean oil is reduced from 2.5 cents, to 2 cents per pound.

These new initial price limits take effect May 1.

Tractor sales

U.S. tractor sales in March were down 9 percent from year ago levels.

According to the Association of Equipment Manufacturers, the sale of smaller, two-wheel drive tractors declined

5 percent, while four-wheel drive tractor sales dropped 30 percent. Combine sales were down 57 percent for the month.

Manipulator loses

The UK-based trader accused by U.S. authorities of making more than $40 million manipulating markets and contributing to the 2010 Wall Street flash crash was on the losing end of at least one trade – his purchase of the CME Group seat that helped to make the alleged scheme possible.

Navinder Sarao bought the seat in May 2008 for $435,000, only a few months before the financial crisis hit, exchange records show. It’s now valued at just $69,500, an 84 percent decline.

CORN ANALYSIS

Corn closed the week 6.34 cents lower.

Last week, private exporters reported a sale of 130,000 metric tons to Taiwan for 2014/15.

Weekly export sales showed corn sales at 32.8 million bushels. Annual corn sales now have reached 1.587 billion bushels and sales are now down 154 mb, compared to a year ago.

The weekly crop progress report showed corn planting progress has reached 19 percent nationally, behind trade estimates, and the average of 25 percent. Two percent of the crop has emerged.

Corn prices pushed lower during April as the market finds little reason to maintain the minimum amount of weather premium built into prices.

Only a small planting delay was noted this spring, but now planters have caught up to the normal pace and with a large amount of the Midwest receiving moisture, traders view conditions as ideal.

As we know from history, the growing season is unlikely to be perfect, so when weather turns adverse during the growing season, prices will have a sharp rally.

Weekly charts show $4.08 as a chart breakout point the market will need to rally above to start a bullish trend.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop, re-owned 50 percent with July options. Sold 10 percent of 2015 production.

Sell 15 percent at $4.65 December. Bought calls to re-own 50 percent of previous sales.

SOYBEANS ANALYSIS

Soybeans closed the week 05.5 cents lower.

Last week, private exporters reported sales of 158,000 mt of beans to an unknown destination for 2014/15 and 390,000 mt of beans to an unknown destination for 2015/16.

Weekly export sales of soybeans were 15.9 mb. Annual sales are still record large at 1.8 bb, up 156 mb from a year ago.

The weekly crop progress report showed soybean seedings are only 2 percent complete.

With the strong crush figure, the market will need to pry soybeans from producers. Look for basis to improve while producers are seeding this year’s corn and soybean crops.

We saw this near the end of April, but the market bought supplies and basis backed off.

When processors need product again, basis will narrow in an effort to pry the product away from the farmer.

Seasonally, prices work higher into June, when highs are normally formed. The market is testing weekly support, which should hold and a rally is likely to unfold into the summer, providing a marketing opportunity for producers.

Soybeans will need to clear $9.93 to turn the trend bullish on the weekly charts.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production. Bought calls on 50 percent of 2014/15 production to re-own previous sales. Sold 10 percent of 2015/16 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.

Hoops can be reached at (605) 660-1155.

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