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BRIAN HOOPS

By Staff | May 15, 2015

Record exchanges

MGEX, reports its highest exchange volume ever during April, totaling 219,728 contracts traded.

This is the thirrd highest volume recorded during any month in Exchange history. A new monthly electronic volume record for April has also been set, as that figure reached 195,833 contracts, the third-best monthly electronic volume of all-time.

This marks the second time this year that exchange volume has surpassed 210,000 during a month, having done so in February.

CME derivitives

CME Group, the world’s leading and most diverse derivatives marketplace, announced that April 2015 volume was 252 million contracts, down 2 percent from April 2014.

Of the total volume, 87 percent was traded electronically. April 2015 volume averaged 11.5 million contracts per day, down 6 percent from April 2014.

Options volume in April averaged 2.3 million contracts per day, down 1 percent versus April 2014, with electronic options growing 6 percent over the same period.

Of the total options volume, 52 percent was traded electronically in April.

Smithfield income

Smithfield Foods reports net income of $97 million in the first quarter, down from $105 million in the same quarter last year. The West Coast port slowdown and an increase in hog supplies were the biggest influences on the bottom line.

For the second and third quarters, Smithfield expects an increase in exports to China. China’s sow herd liquidation may be as large as the entire U.S. herd of 6 million sows.

CORN ANALYSIS

Corn closed the week 1 cent higher.

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

Weekly export sales showed corn sales at 33 million bushels. Annual corn sales now have reached 1.62 billion bushels and sales are now down 154 mb compared to a year ago. The weekly crop progress report was expected to show corn planting progress to reach 50 percent to 55 percent nationally.

The USDA reported plantings reached 55 percent, well above the average pace of 38 percent.

Corn was 9 percent emerged. The top-five states break down as Iowa 68 percent versus 39 percent average. Illinois 69 percent versus 47 percent average. Nebraska 57 percent versus 38 percent average. Minnesota 83 percent versus 34 percent average. Indiana 21 percent versus 35 percent average.

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.

The CBOT report is bullish for corn futures and weekly charts show prices are near a potential double bottom.

Weekly charts show $3.73 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.

Look to buy September calls on the other 50 percent of sales. 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 10.75 cents higher.

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

Weekly export sales of soybeans were 12 million bushels. Annual sales are still record large at 1.815 bb, up 156 mb from a year ago.

The weekly crop progress report was expected to show U.S. soybean seedings at 10 percent to 15 percent finished.

This was above the average year-to-date pace of 9 percent for soybeans.

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 should peak into the June through August growing season, as the market will fear dryness or heat or both at key yield time, which could cut production for the 2015 crop and lower our carryover stocks.

Soybeans cleared the $9.93 area needed to turn the trend bullish.

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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