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BRIAN HOOPS

By Staff | Oct 14, 2016

CME’s trades

CME Group announced that September 2016 average daily volume reached 15 million contracts per day, up 6 percent from September 2015.

CME Group September 2016 options volume averaged 2.9 million contracts per day, up 9 percent versus September 2015, with electronic options averaging 1.7 million contracts per day, up 22 percent over the same period last year.

Third-quarter 2016 volume averaged 14.3 million contracts per day, flat compared with a strong third-quarter 2015. CME Group year-to-date 2016 ADV through September averaged 15.4 million contracts per day, up 8 percent.

Total open interest at the end of third-quarter 2016 was 103 million contracts, up 12 percent from year-end 2015. During the quarter, CME Group reached open interest approaching record levels, peaking at 111.2 million contracts on Sept. 15.

MGEX trades

MGEX has concluded the month of September with a total volume of 138,472 and an electronic volume of 113,568. September total futures volume was up six percent over a year ago.

Futures open interest closed September up 9 percent from a year ago. This is the fourth consecutive year the Exchange has reported a total volume greater than 130,000. Calendar year volume now stands at 1,672,755 with three months remaining.

Cargill’s 1st quarter

Global commodities trader Cargill Inc reported a 66.4 percent rise in net quarterly profit, helped by lower beef prices due to increased cattle supplies and renewed demand. The privately held company said net income rose to $852 million in the first quarter ended Aug. 31 from $512 million a year earlier.

To pay out $7 billion

The U.S. Department of Agriculture will pay more than $7 billion of taxpayers’ money to farmers this fall to keep them afloat in the face of low crop prices, agency officials said on Oct. 4. The USDA released the total on the same day that payments started going out to more than 1.5 million growers of corn, soybeans and other crops, who had enrolled in U.S. safetynet programs to protect themselves from market downturns last year.

Prices for the crops have stayed low in 2016 as massive harvests around the world have increased inventories and intensified competition for exports. U.S. farmers recently started bringing in their latest corn and soybean harvests.

Both of which are expected to be record-large due to favorable weather. In August, the USDA predicted net farm income in 2016 would fall 11.5 percent from 2015 to $71.5 billion because of low commodity prices. If realized, that would be the lowest since 2009.

It also would mean that USDA’s safety-net payments accounted for about 10 percent of net farm income for 2016.

CORN ANALYSIS

Corn closed the week 3.5 cents higher.

Last week, private exporters reported sale of 100,000 metric tons of corn to an unknown destination.

In the weekly export sales report, corn showed a total of 102.4 million bushels (2.6 million mt) with 81.1 mb (2.06 mmt) for the 2016-2017 marketing year.

This was well above 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.

NASS reported U.S. corn crop conditions at 73 percent good-to-excellent, slightly below expectations and down 1 percent from the last week when 74 percent of the crop was rated g/e last week.

This is still above the 68 percent last year. Corn advanced to 24 percent harvested vsersus 25 percent expected and up from 15 percent last week, slightly behind the 27 percent average pace.

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 $3.50 is needed to confirm harvest lows have been scored.

The October supply/demand report should set the tone for the remainder of the fall as demand is near a record pace, but the supply is also expected to be record large.

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

SOYBEANS ANALYSIS

Soybeans closed the week 3.25 cents higher. Last week, private exporters reported sales of 453,000 mt to China.

In the weekly export sales report, soybeans showed a total of 80.1 mb (2.18 mmt) with all for the 2016- 2017 marketing year.

This was more than double 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, U.S. soybean crop conditions improved 1 percent to 74 percent g/e from last week and remains well above the 64 percent last year.

Soybeans moved to 26 percent harvested versus 25 percent expected, and up from 10 percent last week and is only slightly behind the average pace of 27 percent.

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 $9.05 level.

As 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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