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BRIAN HOOPS

By Staff | Oct 16, 2015

CFTC

The Commodity Futures Trading Commission is taking action against Alfred C. Toepfer International, which is owned by ADM.

Toepfer is accused of submitting inaccurate reports about its physical grain positions that were hedged in the futures market.

The time period in question is from 2010 to 2013.

Toepfer is being forced to pay a $400,000 settlement.

EPA vs Mosaic

The Mosaic Co. has reached an agreement with the EPA, settling claims over fertilizer waste management and recovery.

With this agreement, Mosaic will pay an $8 million fine and $170 million for new waste management systems at facilities in Louisiana and Florida.

An additional $630 million will be held in reserve to cover additional costs.

This settlement still needs court approval.

EPS vs TSC

The Environmental Protection Agency has settled with Tractor Supply Co. for alleged violations of emission standards under the Clean Air Act.

EPA says TSC imported and sold more than 28,000 all-terrain vehicles that did not comply with the federal regs.

A $1 million civil penalty will be paid to EPA.

Monsanto losses

Monsanto unveiled plans to cut one-in-eight staff and slash up to $400 million in costs as the seeds giant unveiled a bigger quarterly loss than Wall Street had forecast, and braced investors for a worst-than-expected performance ahead.

CORN ANALYSIS

Corn closed the week 6.75 cents lower and posted a bearish outside weekly lower close.

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

Weekly export sales showed corn sales were 20.5 million bushels for new crop corn.

New crop sales are 434 mb, or down 28 percent, from last year’s pace.

In the weekly crop progress and conditions report, the USDA reported U.S. corn harvest, expected near 25 to 30 percent complete, came in at only 27 percent.

For this time of year we are typically about 32 percent complete.

Iowa is only 13 percent harvested, Minnesota 9 percent and Nebraska 15 percent, suggesting the bulk of harvest pressure in the western Corn Belt remains in front of the market.

Corn conditions were unchanged at 68 percent good-to-excellent.

In the supply/demand report, USDA updated its U.S. corn and soybean production figures as well as ending stocks projections.

The USDA said corn harvested acres were cut 200,000 and the corn crop has a 168 bushels per acre yield, resulting in a 13.555 billion bushel crop and a 1.561 bb carryout.

The yield was up from last month’s 167.5 bpa and production was 30 mb less than a month ago.

Carryout stocks were 31 mb lower than last month.

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 10.5 cents higher.

Last week, private exporters announced sales of 360,000 metric tons of soybeans to China and 20,000 mt of bean oil to an unknown destination.

Weekly export sales of new crop soybeans were 47.2 mb. The export pace of the 2015/16 marketing year now stands at 805.6 mb, or down 26 percent from last year’s pace.

The weekly crop progress report saw U.S. soybean harvest came in at 42 percent complete, right in line with expectations of 40 to 45 percent complete.

The average progress for this time of year is 32 percent.

Soybean conditions improved by 2 percent g/e and are now at the highest ratings since mid-June at 64 percent g/e.

In the supply/demand report, for soybeans, U.S. harvested acres were trimmed 1.1 million acres, above trade ideas.

Yield increased to 47.2 bpa, versus 47.1 bpa in September.

The U.S. soybean crop was lowered 48 mb from last month to 3.888 bb.

There were minor changes to the demand equation today as crush was increased 10 mb, while exports were cut 50 mb, leaving a carryout of 425 mb, down 25 mb from last month.

At 425 mb, 2015/16 U.S. soybean stocks would be up 123 percent from last year and nearly double the level of any years’ stocks in the U.S. over the last eight years.

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. 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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