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BRIAN HOOPS

By Staff | Jul 31, 2015

Planting GEs

U.S. farmers have adopted genetically engineered seeds in the 20 years since their commercial introduction, despite their typically higher prices.

In 2015, adoption of GE varieties, including those with herbicide tolerance, insect resistance, or stacked traits, accounted for 94 percent of cotton acreage, 94 percent of soybean acreage (soybeans have only HT varieties), and 92 percent of corn acreage planted in the United States.

Man beating machines

In hedge fund land, man has pulled ahead of machine. Computer-driven funds that trade using complex programs, often devised by scientists and mathematicians, have been hurt by choppy markets.

According to data group Hedge Fund Research, the $272 billion computer-driven sector, known as commodity trading advisers, is on a three-month losing streak. These funds are down 1.8 percent so far this year to the end of June.

They had gained 5 percent by the end of the first quarter of this year, following a 10.7 percent advance last year.

In contrast, macro funds, which use human judgment to make trades, often betting on a similar range of assets to CTAs, including stocks, bonds, commodities and currencies, have fared better.

Having last year lagged behind CTAs, macro funds are down 0.4 percent so far this year, while on average the hedge fund industry is up 2.4%. Factors hurting these funds included a wobble in U.S. rates because of “mixed messages” from the U.S. Federal Reserve, fears that Greece would leave the eurozone indirectly hitting stocks and bund yields, price spikes in some agricultural commodities due to floods in the U.S., and sharp falls in the Chinese stock market, he said.

Buying Syngenta

Over the past month, the hedge fund, Paulson + Co., has been buying shares of Syngenta stock.

There’s speculation Paulson will push the Syngenta board of directors to accept Monsanto’s takeover bid.

Paulson has purchased shares of potential acquisition targets in the past, including contested mergers in the pharmaceutical industry.

CORN ANALYSIS

Corn closed the week 29 cents lower.

Last week, private exporters reported sale of 231,000 metric tons of corn to Mexico and 116,000 mt of sorghum to an unknown destination.

Weekly export sales showed corn sales were 21 million bushels for both old and new crop.

New crop sales are 35 percent behind last year’s sales pace.

In the weekly crop progress and conditions report, the trade was looking for conditions to be unchanged to 2% lower. Corn ratings held steady for the third consecutive week at 69 percent good-to-excellent, still behind last year’s 76 percent rating.

Illinois is rated 55 percent g/e versus 81 percent last year. Indiana is 45 percent versus 76 percent last year, Ohio 46 percent versus 75 percent, while Iowa is 83 percent versus 77 percent last year.

Minnesota at 86 percent versus 64 percent last year and Wisconsin is 83 percent versus 76 percent.

Illinois’ conditions are the second worst in 10 years, Indiana’s is the second worst in 13 years and Ohio’s is the second worst in the last eight years.

Weather has improved as the eastern Corn Belt and crop ratings have stabilized.

In previous years of similar ratings, yields have reached trend to 10 percent above trend.

The USDA is unlikely to make major yield changes until field surveys are completed.

We noted corn had major resistance on the weekly charts at $4.47, a price level it tested and failed at.

This indicates at least a short term top is in place, although the crop has a long ways to go before it’s made.

Strategy and outlook: Producers are 100 percent sold of the 2014/15 crop, re-owned 50 percent with September calls, liquidate now.

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 43 cents lower.

Last week, private exporters reported sales of 520,000 mt of beans to China; 110,000 mt of beans to an unknown destination and 40,000 mt of bean oil to Venezuela.

Weekly export sales of soybeans totaled 20.3 mb for old and new crop. New crop sales are 52 percent behind last year’s sales and at a nine-year low.

The weekly crop progress report showed soybean ratings were unchanged at 62 percent g/e and the crop is now 11 percent behind last year’s crop.

Illinois soybean crop is only 47 percent g/e versus 77 percent last year, Indiana is 40 percent versus 72 percent last year, while Iowa is 77 percent versus 74 percent last year, South Dakota is 77 percent versus 72 percent last year, and Minnesota is 79 percent versus 64 percent last year.

Illinois’ ratings are the second worst in 10 years, Indiana’s crop is the second worst in 27 years and Ohio’s crop is the second worst in 8 years.

Weather has improved as the eastern Corn Belt and crop ratings have stabilized.

In previous years of similar ratings, yields have reached 4 percent to 10 percent above trend.

Soybeans did fail at major weekly resistance of $10.38 1/2, suggesting prices have had their summer rally and will not work lower until harvest or adverse weather effects the Corn Belt.

The wet areas of Southwest Iowa and Northwest Missouri have been seeded as producers choose not to take the preventive planting option.

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.

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