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BRIAN HOOPS

By Staff | Dec 11, 2015

Syngenta’s counter suit

Syngenta has filed a third-party claim against Cargill, Archer Daniels Midland and two other smaller grain handlers.

The company argues if Syngenta is blamed for damages due to the export rejection of MIR162, commercial name Agrisure Viptera, then grain handlers are also at fault for physically sending it to China and other governments before receiving approval.

The claim was filed in the U.S. District Court of Kansas and is connected to China’s 2013 rejection of U.S. corn that had been found with traces of the then-unapproved MIR162.

“Syngenta filed claims on Nov. 19, against Cargill, ADM and other grain elevators, shippers and exporters that have filed suit against Syngenta in the Viptera China lawsuits,” said Syngenta attorney Michael Jones.

Thousands of farmers are suing Syngenta over the rejection, alleging that the company caused loss of corn sales which lead to economic losses, all because they marketed Viptera before it had approvals. But Syngenta argues gain handlers are to blame.

According to the third-party claim against the handlers, “each elevator, transporter and exporter, including the third-party defendants, exercises discretion in determining whether and how to accept particular types of corn.”

Syngenta claims grain handlers who accepted Viptera had the responsibility not to commingle the trait with the general supply as they could reasonably foresee China might reject it for the presence of Viptera.

Lower farm income

The USDA lowered its farm income forecast for the second time this year, due to lower crop, dairy and hog markets.

The nearly $56 billion forecast is down 4 percent from USDA’s forecast in August. It’s 38 percent below last year and is 55 percent below the 2013 record.

If realized, this year’s net farm income will be the lowest since 2002.

USDA forecasts a 12 percent decline from last year in livestock receipts and an 8.7 percent drop in crop receipts.

The one bright spot, according to USDA chief economist Rob Johansson, is that costs are down.

That’s the first decline in cost of production in six years and farm equity could drop 5 percent, also the first decline in six years.

Farm debt is forecast to rise 6 percent from last year, while the value of farm assets will fall 2 percent.

Government payments are expected to be up about 10 percent this year.

CORN ANALYSIS

Corn closed the week 13.75 cents higher.

Last week, private exporters did not report any sales.

Weekly export sales showed corn sales were only 19.7 million bushels. Annual sales are 692.2 mb or 25 percent slower than last year’s pace.

Prices have rallied off of technical support as funds are covering shorts into the end of the year.

Without better export demand and any weather problems or threats, the rally looks to be limited.

Producers storing grain should look to use the rally to make sales of the product or options to be rewarded with a storage hedge.

Informa pegged the Argentine corn crop at 21 million tonnes versus its previous estimate of 18.5 million tonnes.

This compares to the latest USDA estimate of 26.5 mt.

Informa lowered the Brazilian crop slightly to 81.3 mt from 81.5, in line with the USDA estimate.

The USDA supply/demand report, scheduled for release Sept. 9 looks to lend little direction to prices, with no production adjustment and the USDA likely to leave exports unchanged for now.

Strategy and outlook: Producers should use this rally into the end of the year to make additional sales or buy protection if storing the crop until a weather scare develops in the summer months.

SOYBEANS ANALYSIS

Soybeans closed the week 32.5 cents higher.

Last week, private exporters announced sales of 373,000 metric tons of soybeans to an unknown destination and 310,000 mt of soybeans to China.

Weekly export sales of new crop soybeans were 32.3 million bushels.

The export pace of the 2015/16 marketing year now stands at 1.210 billion bushels, or down 17 percent from last year’s pace.

Informa pegged the Argentine bean crop at 58.5 mt versus 59.0 previously, and the USDA at 57.0 mt.

Informa raised its Brazilian estimate from 101.0 to 101.4 mt. This compares to the USDA at 100.0 mt.

Prices are responding to the bullish technical reversal off technical support and rallying back near resistance.

This was the market opportunity that was previously forecast. Producers should take advantage of this marketing opportunity before the South American crop becomes available later this winter.

Strategy and outlook: Producers should use this rally into the end of the year to make additional sales or buy downside protection if storing until the summer. Do not store unprotected soybeans into the winter months.

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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