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BRIAN HOOPS

By Staff | Nov 6, 2015

Profitable quarter

CME Group Inc, reported last week a better-than-expected quarterly profit as options trading volumes reached record levels in volatile markets.

Revenue from clearing and transaction fees rose 11 percent to $715 million, while daily trading volumes rose 7 percent, said CME, which owns the Chicago Mercantile Exchange.

“During the quarter, we reached record levels of options volume and the highest percentage of volume traded electronically” said Chief Executive Offiver Phupinder Gill.

Net income attributable to CME Group in the third quarter ended Sept. 30 rose to $359.9 million, or $1.06 per share, from $290 million, or 86 cents, a year earlier.

CORN ANALYSIS

Corn closed the week 2 cents higher.

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

Weekly export sales showed corn sales were 27.9 million bushels for corn. YTD sales are 495.6 mb, or down 242 mb from last year’s pace.

In the weekly crop progress and conditions report, the USDA reported U.S. corn harvest is 75 percent complete, in line with trade estimates and well ahead of last year’s pace of 46 percent.

This is the sixth fastest harvest since 1991. Harvest is nearly completed in the majority of the Corn Belt as unseasonably dry conditions have allowed combines and fall tillage equipment to rapidly harvest this year’s crop and finish much of the fall fieldwork.

A higher quality crop has been harvested with producers reporting no drying costs associated with this year’s corn. Yield estimates continue to trend better than expected and the November supply/demand report will likely show a larger corn crop compared to a month ago.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.

There is a huge demand base for corn, currently estimated at 13.755 billion bushels. With the huge demand base and corn now locked away in farmer storage, the corn market will need to bid for acres this spring to rebuild the ending stocks at a more comfortable level.

Strategy and outlook – Producers:

A). Are 100 percent sold of the 2014/15 crop.

B). Sold 50 percent of 2015 production and own December puts on balance of production.

C). Will exit puts when December hits $3.65.

D). Sold 20 percent of 2016 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 7.25 cents lower.

Last week, private exporters announced sales of 240,000 metric tons of soybeans to China.

Weekly export sales of new crop soybeans were an outstanding 76.7 mb.

The export pace of the 2015/16 marketing year now stands at 1.002 bb, or down 247 mb from last year’s pace.

The weekly crop progress report saw U.S. soybean harvest came in at 87 percent complete, well above last year’s pace of 75 percent done and the five-year average pace of 80 percent done.

Harvest is nearly completed in the majority of the Corn Belt as unseasonably dry conditions have allowed combines and fall tillage equipment to rapidly harvest this year’s crop and finish much of the fall fieldwork.

Yield estimate continue to trend higher and the November supply/demand report will likely show a larger soybean crop compared to a month ago.

Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.

Demand for U.S. soybeans is forecast to be record large. The huge demand base for soybeans, estimated at 3.685 bb, comes in the form of strong export demand and increased crushings.

Ending stocks are currently forecast at 425 mb, nearly double any stocks over the last eight years and could increase if yields increase as well.

The market will be anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.

Strategy and outlook – Producers:

1). Are 70 percent sold of 2015/16 production.

2). Own January puts on balance of production.

3). Will sell 20 percent at $9.50.

4). 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 not a solicitation. Brian Hoops can be reached at (605) 660-1155.

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