×
×
homepage logo

BRIAN HOOPS

By Staff | Jul 10, 2015

Closing pits

U.S. regulators will likely allow CME Group Inc. to close most of its open outcry futures pits as planned next month, despite last-minute calls from a handful of traders and

brokers for an extended review, industry lawyers said.

CME adequately responded to concerns four traders and brokers submitted to the U.S. Commodity Futures Trading Commission in letters during the last week of June and again last week, according to attorneys who reviewed regulatory filings at Reuters’ request, but who are not involved in the matter.

The world’s largest futures market operator was forced on June 31 to postpone the closure of the pits to July 6 from the originally scheduled date of July 2 after it revised a CFTC filing in response to the traders’ initial letter.

JBS buying Cargill pork

Brazil’s JBS SA agreed to buy Cargill Inc.’s U.S. pork business for $1.45 billion, the latest move by the the world’s largest meat company to expand globally.

Cargill announced the purchase in a july 1 statement . The deal is subject to regulatory approval.

“This transaction will strengthen our position as a producer and supplier of all major animal proteins around the world,” Martin Dooley, president and chief operating officer of JBS’s U.S. pork unit, said in the statement.

JBS, which is based in Sao Paulo, last month agreed to buy Marfrig Global Foods SA’s unit in the U.K. for about $1.5 billion including debt.

In March it bought Primo Group, the largest producer of ham and bacon in Australia and New Zealand, for about A$1.45 billion ($1.11 billionU.S.).

Buying the Cargill unit will give JBS a meat-processing plant in Ottumwa, and another in Beardstown, Illinois. Both plants collectively processed 9.3 million hogs last year.

The deal also includes five feed mills and four hog farms.

CORN ANALYSIS

Corn closed the week 35.25 cents higher.

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

Weekly export sales showed corn sales at 24.7 million bushels. Annual corn sales now have reached 1.721 billion bushels and sales are now down 154 mb compared to a year ago.

In the weekly crop progress report, corn conditions came in at 68 percent good-to-excellent versus last week of a 71 percent g/e.

The largest weekly decline was in Ohio (-19 percent), Indiana (-10 percent), and Illinois (-8 percent).

In the quarterly stocks report, the USDA reported quarterly stocks as of June 1 at 4.44 bb for corn versus the estimates of 4.55 bb.

Planted acres for corn was reported at 88.89 million acres, lower than March intentions of 89.2 million acres and less than average estimates.

When analyzing these numbers, they all combine to create a bullish scenario for the markets.

Corn production, using 165 bushels per acre, comes in at 13.127 bb, less than total usage of 13.710 bb, creating a tight 1.245 bb of ending stocks.

This is a major change compared to the June 10 supply/demand report figures of 1.771 bb. Things could get more interesting if the 165 bpa yield is lowered due to declining crop conditions.

A loss of 5 bpa is equivalent to approximately 400 mb of ending stocks.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop, re-owned 50 percent with September calls. Sold 50 percent of 2015 production and own December puts on balance of production. Sold 20 percent of 2016 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 44.25 cents higher. Last week, private exporters did not announce any private sales.

Weekly export sales of soybeans were 4.88 mb old crop and only 12.8 mb for new crop sales. New crop sales are at a five-year low.

The weekly crop progress report showed soybeans are now 94 percent planted with a g/e rating of 63 percent versus last week of 65 percent g/e and 72 percent last year.

The largest declines were Ohio (44 percent g/e), Indiana (49 percent g/e) and Illinois (52 percent g/e).

Missouri plantings advanced 11 percent to 62 percent versus average of 94 percent; with Kansas advancing 13 percent to 86 percent versus average of 96 percent.

There are 2.5 million acres of soybeans that should be planted that are not.

In the stocks and acreage report, soybean stocks were 625 mb, below estimates of 670 mb, while wheat stocks were 753 mb versus estimates of 718 mb.

Planted acres for soybeans were reported at 85.14 million acres, above March intentions of 84.63 million acres and slightly lower than estimates of 85.17 million acres.

For soybeans, the new acreage data and a yield of 43 bpa equates to a crop size of 3.55 bb, less than usage of 3.72 bb and ending stocks, which were thought to be 475 mb last month, are now a bullish 135 mb.

The USDA will update production figures on July 10 in the supply/demand report.

Strategy and outlook: Producers are sold 100 percent of 2014/15 production and sold 50 percent of 2015/16 production and own November puts on balance of production. Sold 20 percent of 2016 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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page