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BRIAN HOOPS

By Staff | Oct 9, 2015

Positive start

MGEX began its fiscal year on a positive note by reporting a total volume of 131,914 from the month of September.

The Exchange has now reported a total volume of more than 125,000 contracts traded in every month this year.

Electronic volume from September eclipsed the century mark for the 21st-consecutive time, finishing the month at 106,691.

Total volume for the calendar year now stands at 1,720,008, which is five percent higher than at this time a year ago.

Membership up

The National FFA Organization has set a new membership record.

Membership is now at 629,367. That’s up from 610,240 in 2014, which is a 3 percent increase.

Membership has increased more than 20 percent since 2009-2010.

Cargill settlement

Cargill’s Mexican unit will pay a $500,000 settlement with the Commodity Futures Trading Commission.

The CFTC claims Cargill was involved in illegal wash trades from 2010 to 2014 for corn, soybeans and wheat.

With this practice, the same entity acts as both the buyer and seller, which can be used to manipulate prices.

Cargill admits no wrongdoing.

Weight limits

To help haul this year’s huge harvest in from the field, Gov. Terry Branstad signed into effect on Sept. 25 a proclamation granting a temporary weight limit exemption for trucks on Iowa roads.

The waiver specifically increases the weight allowable for shipment of corn, soybeans, hay, straw and stover, by 12.5 percent per axle (up to a maximum of 90,000 pounds per load) without the need for an oversize or overweight permit.

As in past years when a waiver was granted, the 2015 fall harvest exemption again applies to loads transported on all highways within Iowa, excluding the Interstate system.

Trucks cannot exceed the truck’s regular maximum by more than 12.5 percent per axle and must obey the posted weight limits on all roads and bridges.

ICGA provided Branstad the information required to grant the waiver, as well as information on estimated harvest predictions.

The proclamation directs the Iowa Department of Transportation to monitor the operation of the exemption, to assure the public’s safety and facilitate movement of the trucks involved.

Farmers who are transporting grain are also required to follow their vehicle safety standards on axle weights. The exemption is granted for 60 days beginning Sept. 25.

CORN ANALYSIS

Corn closed the week one-quarter of a cent lower.

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

Weekly export sales showed corn sales were 28 million bushels for new crop corn.

New crop sales are 386 mb, or 25 percent of the USDA’s current projection.

In the weekly crop progress and conditions report, USDA reported U.S. corn harvest advanced 8 percent to 18 percent complete, behind the national five-year average of 23 percent.

Seventy-one percent of U.S. corn is mature (72 percent average).

U.S. corn rating remained unchanged at 68 percent good-to-excellent versuss 74 percent a year ago.

The USDA reported Sept. 1 grain stocks at 1.731 billion bushels, in line with the average trade estimate and sharply lower than the June 1 stocks as feed usage for the third quarter were a six-year high.

Last week, Informa increased its production forecasts for the U.S. crop to 168.4 bpa and a yield of 13.561 bb.

That estimate was also above FC Stone’s estimate of 13.541 bb.

FC Stone forecast a U.S. corn yield of 167 bpa. Prices have been unable to rally much with the ongoing harvest, conversely, prices have limited downside risk as the yields have been so variable.

If producers have limited storage options, holding onto corn makes the most sense this year.

Strategy and outlook: Producers:

  • Are 100 percent sold of the 2014/15 crop.
  • Sold 50 percent of 2015 production and own December puts on balance of production.
  • Will exit puts when December hits $3.65.
  • Sold 20 percent of 2016 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 13.34 cents higher.

Last week, private exporters announced sales of 1.120 million metric tons of U.S. soybeans to China and 249,000 mt of U.S. soybeans to an unknown destination.

Weekly export sales of new crop soybeans were 92 mb.

The export pace of the 2015/16 marketing year now stands at 759 mb, or 44 percent of the current USDA sales forecast.

The weekly crop progress report saw soybean soybean harvest advanced 14 percent last week to 21 percent complete, ahead of the five-year average of 16 percent.

Soybean rating declined 1 percent to 62 percent g/e versus 72 percent a year ago; while 74 percent of the soybean crop is dropping leaves (70 percent average).

In the quarterly stocks report, the USDA reduced the 2014 bean crop by 42 mb to 3.927 bb.

This was below the average trade estimate. Sept. 1 stocks came in at 191 mb versus trade expectations of 205 mb.

Last week, Informa forecast the U.S. soybean crop at 3.878 bb and a yield of 47.2 bpa.

Informa’s yield was larger than FC Stone’s 46.9 bpa, but its production figure was smaller than FC Stone estimate of 3.919 bb.

The limited carry in the market does not bode well for producers trying to store their crop this year.

Selling a post harvest rally instead of storage makes sense.

Strategy and outlook: Producers

:

  • Are sold 100 percent of 2014/15 production.
  • Sold 50 percent of 2015/16 production and own November puts on balance of production.
  • Will exit puts when November hits $8.35.
  • 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.

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

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