The Commodity Futures Trading Commission has revised the language of a proposed rule governing automated trading to add a requirement that traders provide algorithm codes to the regulator without a subpoena. Industry groups, including FIA and FIA’s Principal Traders Group, have argued that regulators should be required to obtain a subpoena to gain access.
A London-based trader pleaded guilty to wire fraud and spoofing on Nov. 9 after being extradited to the United States to face federal charges related to his role in the 2010 Wall Street “flash crash.” Navinder Sarao, 37, who traded on the Chicago Mercantile Exchange from his parents’ home near London’s Heathrow Airport, appeared in federal court in Chicago after losing a legal challenge to his extradition. Sarao agreed to pay the U.S. government $12.8 million, the amount prosecutors said he earned from illegal trading.
He will be released on a $750,000 bond and will be allowed to return to the U.K. pending sentencing in the United States, U.S. judge Virginia Kendall said. Sarao used an automated trading program to spoof markets by generating large sell orders that pushed down prices, and then canceled the trades and bought contracts at lower prices.
Bunge’s 3Q income
Bunge reports third quarter net income of $118 million, down 51 percent from the same period last year. Through nine months, net income is down 19 percent. Bunge said its third quarter performance was impacted by low farmer selling in South America, which reduced grain origination and soybean crushing results.
CME’s net income
The CME Group reports net income of $473 million for the third quarter. That compares to $360 million in the same quarter last year. CME Group executive chairman and president Terry Duffy said this quarter had the second highest quarterly revenue in the market’s history.
U.S. beef exports for the month of September were released this week totaling 214.5 million pounds, up 30 percent from a year ago. Beef imports totaled 219 million pounds, down 24 percent from a year ago. Over the last five years, on average, 32 percent of imported beef comes from Australia. Imports from Australia are down 403 million pounds, or 38 percent year-to-date.
Corn closed the week 7.25 cents lower.
Last week, private exporters reported sales of 140,000 metric tons of corn to Saudi Arabia and 172,000 mt of corn to an unknown destination.
Weekly export sales of corn showed a total of 48.6 mb (1.23 million mt) with all for the 2016-2017 marketing year. This was above the 29.6 mb (752,900 mt) needed this week to be on pace with USDA’s November demand projection of 2.225 billion bushels.
NASS reported U.S. corn harvest advanced to 86 percent complete versus 84 percent expected, 75 percent last week and 85 percent average.
In the monthly supply/demand report, U.S. corn production was estimated at 15.2 bb versus October at 15.05 bb. Yield was estimated at 175.3 bpa versus October at 173.4 bpa. This was the second largest October to November increase in history.
U.S. ending stocks came in at 2.4 bb versus October at 2.320 bb. World ending stocks rose from 216.8 mmt to 218.2 mmt. Farmer selling will slow and basis levels will likely improve during the winter and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels.
Strategy and outlook: Use rallies to sell inventory.
Soybeans closed the week 3.5 cents lower.
Last week, private exporters reported sales of 258,000 mt to China and 251,000 mt of meal to Dominican Republic and Philippines.
Weekly export sales of soybeans showed a total of 40.6 mb (1.1 mmt) with 36.8 mb (1.0 mmt) for the 2016-2017 marketing year.
This was above the 18.3 mb (499,000 mt) needed this week to be on pace with USDA’s November demand projection of 2.05 bb.
The U.S. soybean harvest advanced to 93 percent complete versus 93 percent expected, 87 percent last week and just ahead of the average of 91 percent.
In the monthly supply/demand report, the USDA forecast U.S. soybean production at 4.361 bb versus October at 4.27 bb. Yield came in at 52.5 bpa versus 51.4 bpa in October.
U.S. ending stocks were pegged at 480 mb versus 395 mb in October. World stocks rose from 77.4 mmt to 81.5 mmt.
The crush estimate was lowered by 20 mb to 1.93 bb, but export forecasts were raised by 25 mb to 2.05 bb.
Farmer selling will slow now that harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter.
The market will be anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.
Weather during the South American growing season will be closely watched.
Strategy and outlook: Use rallies to sell inventory.
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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