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BRIAN HOOPS

By Staff | Dec 30, 2016

Stine Seeds

Major producers of genetically modified seeds, including Monsanto Co. and Bayer AG, have long barred U.S. farmers from saving seeds after harvest to replant – a condition that allows the companies to charge every year for the technology.

Now, a smaller challenger, Stine Seed, wants to disrupt that practice. Next year, family-owned Stine said it will give about 200 farmers in a pilot program the chance to replant genetically modified soybean seeds.

The program is expanding after launching this year with about 50 farmers. Major genetically modified seed companies have largely stamped out the once-common practice of saving seed in the United States over the past two decades. They have required farmers to sign contacts that bar them from replanting the patented, genetically modified seeds now used to produce most of the nation’s soybeans.

If Stine’s program succeeds and expands further, it would represent the renewal of a technique that major seed developers view as a threat to the commercial value of their intellectual property. Seeds in Stine’s program will include those containing a genetic trait called LibertyLink, which was developed by Bayer and licensed by Stine, and that’s created tension between the companies.

Monsanto, the world’s largest seed maker, has successfully sued U.S. farmers who saved genetically modified seed after pledging in contracts with the company to use it for only one crop. Other trait developers make U.S. farmers sign similar agreements.

In Argentina, where farmers are legally allowed to save seed, Monsanto has stopped launching new soybean technologies, following a dispute with exporters and the government over royalties paid for saved seed.

New CEO for CME

CME Group Executive Chairman and President Terry Duffy will get a raise along with his new CEO title next year. Duffy, 58, will see the value of his annual pay package jump by more than half to about $10 million, up from $6.15 million last year, under terms of his new employment agreement disclosed today in a filing with the Securities and Exchange Commission.

That compensation includes a $1.5 million annual salary, $2.63 million bonus and an estimated equity award of $5.25 million, plus other benefits.

Duffy is taking over from Phupinder Gill, 56, who abruptly announced last month that he would retire at the end of this year, after four years in the role.

There was little explanation provided by the company for his exit.

Farmland values

Average Iowa farmland value declined for the third year in a row, down 5.9 percent to $7,183 an acre over the past year.

The drop marks the first time since the 1980s farm crisis that land values have fallen for three straight years, according to an Iowa State University report on Dec. 20.

Despite values tumbling, chances are low that Iowa will face a replay of the devastating farm crisis, said Wendong Zhang, an ISU assistant economics professor, who leads the university’s annual farmland survey.

Average Iowa farmland values are now about 17.5 percent lower than the historic high set in 2013 at $8,716 an acre.

“The golden era of phenomenal, yet abnormal, growth in farm income and land values, as we saw from 2006 to 2013, is already behind us,” Zhang said. “The land market is going through an orderly adjustment while the U.S. agricultural sector” adjusts to declining profits.

CORN ANALYSIS

Corn closed the week 10.25 cents lower.

Last week, private exporters reported sale of 128,000 metric tons of corn to Japan, 110,800 mt of corn to an unknown destination and 100,400 mt of corn to Mexico.

Weekly export sales of corn showed a total of 49.2 million bushels (1.25 million mt) with all for the 2016-2017 marketing year.

This was above the 24.2 mb (614,100 mt) needed this week to be on pace with USDA’s December demand projection of 2.225 billion bushels.

As previously mentioned, fund buying was the most bullish driving force for prices with very little farmer hedge pressure until after the first of the year.

Funds have slowed their buying interest and prices have retreated off weekly resistance.

Prices should struggle on rallies as huge supplies of old crop corn will need to move from farmer hands into commercial hands.

The downside should be limited as traders will expect planted acres to be lower in 2017 and with record demand, there is hope a weather issue will lift prices.

A sideways trading range is likely to dominate the winter months until a weather issue arises.

Strategy and outlook: A rally into weekly resistance was a great time to sell inventory, look to re-own on weekly support.

SOYBEANS ANALYSIS

Soybeans closed the week $.48 1/4 lower. Last week, private exporters reported a sale of 396,000 mt of soybeans to China.

Weekly export sales of soybeans showed a total of 66.9 mb (1.82 mmt) with 66.6 mb (1.81 mmt) for the 2016-2017 marketing year.

This was well above the 10.3 mb (280,400 mt) needed this week to be on pace with USDA’s December demand projection of 2.05 bb.

In the November crush report, November crush came in below expectations at 160.8 mb, moderately lower than the average trade estimate of 162.6 million and near the lower end of the range of market ideas of 159.3 to168 million. This was below the 164.6 mb crushed in the month of October however it was above the 156.1 mb crushed a year ago.

Soybean values have fallen as recent rains in South America have erased some of the dry areas in Argentina.

January is the key reproductive month for soybean production in South American and with good weather, look for soybean values retreat into weekly chart support.

Strategy and outlook: A rally into weekly resistance was a great time to sell inventory, look to re-own sales on weekly support.

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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