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By Staff | Oct 7, 2016

Wells Fargo suspended

The state of California will no longer use Wells Fargo as an underwriter for the issuance of state municipal bonds, and the bank will have no involvement in the state’s banking or investment activities for the next 12 months. California is the largest issuer of municipal bonds and the home state of Wells Fargo. In a release, the state’s treasurer admonished Wells Fargo for its recent fake-accounts scandal.

“Wells Fargo’s fleecing of its customers by opening fraudulent accounts for the purpose of extracting millions in illegal fees demonstrates, at best, a reckless lack of institutional control and, at worst, a culture which actively promotes wanton greed,” John Chiang, the state treasurer, said in the release. If the bank fails to meet California’s standards during the 12 months, the state could permanently sever ties with Wells, according to the release.

The release also said that the state currently has $2.3 billion invested in Wells Fargo “fixed income securities and equity.” Wells Fargo is one of the top banks for debt deals in the U.S. It ranked fourth in U.S. debt capital markets activity as of Sept. 23, ahead of Goldman Sachs and Morgan Stanley, according to data from Dealogic.

China to export corn

China has given approval to at least two companies to export corn, trading sources said, in a radical move by the world’s No. 2 producer to cut its ballooning surplus and unleash more supply into a saturated global market. In what could be the first bulk exports in a decade, the Chinese government has issued permits to two state-owned companies, top grains trader Cofco and major processor and trader Beidahuang, allowing them to sell grain abroad, the China-based sources who were not authorized to speak to the media said.

The greenlight was for around 2 million tonnes of corn to be exported by three state-owned companies, said one of the trading sources who had spoken to one of the exporters. China last exported significant volumes of corn in 2006/07, when it sold almost 5 million tonnes.

It has since become a major importer after a state stockpiling scheme pushed domestic prices way above the global market, stoking purchases of cheaper grain from overseas. The policy has left a corn stockpile estimated at nearly 240 million tonnes – much of it poor quality due to its age – which Beijing is now struggling to offload after abandoning the program this year.

On top of that, China’s crop of nearly 220 million tonnes is set to hit the market next month.


Corn closed the week 1 cent higher.

Last week, private exporters reported sale of 1,577,340 metric tons of corn to Mexico, the fourth largest single sale in history.

In the weekly export sales report, corn showed a total of 22.6 million bushels (575,000 mt) sold with all for the 2016-2017

marketing year.

This was below the 29.4 mb (746,900 mt) needed this week to be on pace with USDA’s September

demand projection of 2.175 billion bushels. As of September 25, NASS reported corn harvest advanced 6 percent to only15 percent complete, slightly behind the average pace of 19 percent.

Corn ratings unchanged at 74 percent good-to-excellent versus 68 percent last year with 73 percent of crop mature versus 64 percent a year ago.

The quarterly stocks report showed corn stocks at 1.738 bb, slightly below the average trade estimate of 1.757 bb. This was only 7 mb larger than last year’s stocks.

Early harvest data has been variable and inconsistent enough the USDA may have lowered yield forecasts in the October supply/demand report set to be released earlier this week.

So far, corn has found downside support near $3.25. A close below this area would open the door to additional selling interest, while a close above resistance of $3.45 is needed to confirm harvest lows have been scored.

Strategy and outlook: Producers should maintain hedges until harvest lows are scored.


Soybeans closed the week .25 cents lower. Last week, private exporters reported sales of 649,711 mt to an unknown destination and 491,000 mt of soybeans to China.

In the weekly export sales report, soybeans showed a total of 62.2 mb (169 million mt) with nearly all for the 2016-2017 marketing year.

This was above the 37.6 mb (1.02 mmt) needed this week to be on pace with USDA’s September demand projection of 1.985 bb.

Last week, soybean harvest advanced to only 10 percent complete versus the average of 13 percent.

Soybean ratings were unchanged at 73 percent g/e versus 62 percent last year, with 68 percent leaf dropping versus 64 percent average.

The quarterly stocks report was slightly below expectations at 197 mb versus estimates of 202 mb and 6 mb larger than a year ago.

No doubt demand remains stellar and will limit the downside for the soybean market. Look for the USDA to increase its production forecasts for the soybean market in the October supply/demand report, which will raise ending stocks level.

A close below key support of $9.43 opens the door to test the $9 level. The COT report should have turned bullish by then, look for that area to be a supportive area for the market given the strong demand.

Strategy and outlook: Producers should maintain hedges until harvest lows are scored.

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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