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BRIAN HOOPS

By Staff | Feb 5, 2016

Corn thief

Man caught in Iowa cornfield, guilty in trade secrets case.

Mo Hailong admits conspiring to steal DuPont and Monsanto seeds.

Prosecutors recommend 5-year sentence as part of plea deal.

A Chinese national admitted conspiring to steal trade secrets after he was seen visiting cornfields in Iowa and charged with plotting to steal genetically modified seeds worth tens of millions of dollars.

Mo Hailong, 46, pleaded guilty Jan. 27 to participating in a conspiracy to steal intellectual property from DuPont and Monsanto and transport it to China, the U.S. Justice Department said in a statement.

As part of his plea agreement, prosecutors said they will recommend that Mo’s prison sentence not exceed five years, half the maximum sentence. The defendant, who was arrested in Miami and is also known as Robert Mo, was director of international business at Beijing Dabeinong Technology Group Co., part of the Beijing-based DBN Group, the U.S. said.

The government alleged that Mo and his conspirators stole corn seed from fields in Iowa and Illinois to benefit Kings Nower Seed, a unit of DBN.

Ending stocks growing

USDA updated its baseline projections to reflect higher 2016/17 corn, soybean and wheat ending stocks compared to previous estimates.

2016/17 U.S. corn ending stocks are estimated at 1.89 billion bushels versus 1.75 billion in the December baseline, while 2016/17 total corn demand is estimated at 13.83 bb versus the December baseline 13.93 bb.

2016/17 U.S. soybean ending stocks are estimated at 466 million bushels versus 421 mb in the December baseline, and 2016/17 total soybean demand at 3.820 bb versus the December baseline of 3.859 bb.

2016/17 U.S. wheat ending stocks are estimated at 960 mb versus 928 mb in the December baseline.

CORN ANALYSIS

Corn closed the week 1.5 cents higher.

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

Weekly export sales showed corn sales were at 32.2 mb. Annual sales are 909 mb, or 26 percent slower than last year’s pace.

During February, the market will search for price discovery and a price level which will stimulate usage as the large 1.8 bb of ending stocks reported in January will be difficult to reduce given current demand fundamentals.

With another negative report in February, ending stocks could widen even further.

Last year, U.S. farmers reduced corn seeded acres to 88.9 million, the smallest since 2010. This year, U.S. corn producers are expected to plant 2 to 3 million more acres as winter wheat seeded acres were reduced.

As with every season, weather this spring will be important to the growing season. It won’t matter how many acres are planted if it doesn’t rain.

Producers should look to buy the weakness in the last half of February for a rally into the spring and possibly the summer if spring plantings are delayed and then the rains quit.

For February, additional downside risk is forecast until a weather problem develops this spring or summer as supplies remain large.

Strategy and outlook: Producers should use rallies 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 5.5 cents higher.

Last week, private exporters did not announce any private sales, but did announce 395,000 metric tons of soybeans previously sold to China was canceled.

Weekly export sales of new crop soybeans were 23.8 mb. The export pace of the 2015/16 marketing year now stands at 1.49 bb, or down 9 percent from last year’s pace.

Normally, February looks to bring the addition of slower U.S. export sales as early planted beans in Northern Brazil begin to come to harvest and hit the world market at a price lower than any U.S. posted price.

Because Brazil can only store up to 25 percent of their harvest, they are forced to forward sell approximately 75 percent of its early harvested soybeans.

It is the period between mid-February and May that South America over takes the U.S. as the primary port of origin for beans.

This will leave weather on late-maturing crops as the sole bullish factor for South American soybean values.

February in Brazil and Argentina is like August here as it’s a key yield-developing month for three quarters of the crop.

If weather turns hot and dry, prices will rally sharply, however with good rains across the country, the price of soybeans should turn south and test contract lows.

The USDA supply/demand report in February should show only minor changes.

Ahead of the report, traders will anticipate the USDA to slightly increase ending stocks as the demand slows and remains behind last year.

Strategy and outlook: Producers should use rallies 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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