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BRIAN HOOPS

By Staff | Mar 18, 2016

Record ethanol volume

The Energy Information Administration said new records were set in 2015 for U.S. ethanol production and blending.

There was 14.8 billion gallons of ethanol produced in 2015 with 13.7 billion gallons blended into the U.S. gas supply.

More price declines

USDA projects that total meat and poultry production will be at a record high 97 billion pounds this year, as production of beef, pork, broiler and turkey all increase.

Milk production is also projected to reach a record of almost 212 billion pounds.

USDA projects fed steer prices to decline 7 percent, to $137 per hundredweight.

Hog prices are pegged to fall 6 percent from last year, to $47.

Milk prices are projected to fall 8 percent from last year, to $15.65 per hundredweight.

Brazilian corn

In February, Brazil recorded corn exports of 5.37 million tons. According to data from the Ministry of Development, Industry and Foreign Trade, this is almost five times higher than exports for February 2015, which stood at 1.10 million tons.

These exports produced revenue of $892.2 million, compared with $206.4 million in February last year. February exports are up 20.6 percent on January volumes, which were 4.45 million tons.

Cumulating volumes for 2016, Brazilian corn exports are at 9.83 million tons. Corn exports are set to shrink in the coming months, giving way to soybean shipments.

As soybeans are harvested, producers start planting the second crop, which includes corn, cotton, rice and beans. An increase in the acres planted to corn for the second crop, plus a good harvest, is expected, boosting exports again during the second half of the year.

Hijacked brain

A former JPMorgan Chase & Co. broker, who said he stole millions of dollars from customers because his brain was “hijacked” by an addiction to sports gambling, was sentenced to five years in prison.

Michael Oppenheim, who at one point had about 500 clients and almost $90 million under management at JPMorgan, got so deeply in debt that, according to his lawyer, even his bookie expressed sympathy for him.

Oppenheim began placing bets on weekly National Football League games in 1993 and eventually moved to online sports betting, his lawyer said in a letter to the judge. To make up for his losses, he stole from his clients to pay for trades in options of technology stocks like Apple Inc. and ended up losing $2 million on those bets.

He pleaded guilty in November to stealing more than $20 million, having targeted 10 of the wealthiest clients on his list.

He covered up the theft by giving the customers faked account statements in what the U.S. called a game of “hide and seek” with their money.

CORN ANALYSIS

Corn closed the week 5.5 cents higher.

Last week, private exporters reported a sale of 170,800 metric tons of corn to Japan.

Corn export sales were disappointing at 46.2 mb, near the high end of trade estimates. Annual sales are 1.13 billion bushels, or 20 percent slower than last year’s pace.

In the March supply/demand report, the USDA left U.S. corn-ending stocks unchanged at 1.837 billion bushels, as corn exports were left unchanged despite lagging sales.

Traders were looking for a 17 million bushel increase to ending stocks.

World corn ending stocks were down 1.81 million metric tons to 207 mmt.

Traders will anticipate an increase in planted acreage in the March 31 report of 2 to 3 million acres. Forecasts for a cool, wet spring could make planting additional corn acres difficult, thus corn could find strength in the last half of March and early April as the market will need to secure acres.

Commercial interests will view pullbacks in the market as buying opportunities with forecasts for a cool, wet spring possibly giving way to a La Nina event this summer.

Thus commercial entities as well as large speculators will want to be long ahead of the growing season. With the already saturated soils and additional rain forecasted this spring, spring highs for corn are likely to be scored during the spring planting timeframe as values rally to secure enough planted acres to meet demand.

No year is the same, but last year, prices ground lower into early June until weather issues rallied prices.

Strategy and outlook: Producers should use a rally during the spring planting timeframe to liquidate remaining inventory and begin to become defensive on new crop corn sales.

SOYBEANS ANALYSIS

Soybeans closed the week 15.75 cents higher.

Last week, private exporters announced sale of 140,000 mt of soybeans to an unknown destination, and 110,000 mt of soybeans to China.

Weekly soybean sales came in at 17.5 mb. The export pace of the 2015/16 marketing year now stands at 1.575 bb, or down 10 percent from last year’s pace. The key pod-setting stage in South America should be completed by March 15, leaving the market to remove any weather premium that may remain in values.

In the March supply/demand report, soybean ending stocks rose 10 million bushels, to 460 mb, due to a lowered crush estimate of 1.87 billion bushels.

Soybean meal imports were raised 50,000 tons.

Soybean oil ending stocks were up 120 million pounds to 2.185 billion, due to higher beginning stocks and exports were down 200,000 pounds.

World soybean ending stocks dropped 1.52 mmt, to 78.9 mmt, even though Brazil and Argentina production estimates were left unchanged at 100 mmt and 58.5 mmt, respectively.

In the March 31 acreage report, the trade should be expecting an increase in U.S. soybean seedings of 500,000 to 1 million acres. If wet growing conditions materialize this spring as forecast, corn will rally to buy acres as the market anticipate farmers will shift corn acres to soybeans.

A very wet forecast will limit the upside for soybeans. Like with corn, technical breaks should be well supported by commercial entities as they begin to position long ahead of the growing season as they wish to extend coverage in case prices rally sharply on a weather-related event.

Strategy and outlook: Producers should use a rally during the spring planting timeframe to liquidate remaining inventory and begin to become defensive on new crop soybean sales.

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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