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BRIAN HOOPS

By Staff | Jan 13, 2017

Record trading

CME Group announced that 2016 average daily volume reached a record 15.6 million contracts, up 12 percent from 2015.

Five of CME Group’s top 10 daily volume days occurred within 2016, with three of those during the fourth quarter. CME Group fourth-quarter 2016 ADV reached a 16.3 million contracts, up 24 percent from fourth-quarter 2015, while December 2016 ADV reached 15 million contracts, up 15 percent compared with December last year.

Full-year 2016 options volume averaged a record 3.1 million contracts per day, up 14 percent versus 2015, with electronic options averaging a record 1.7 million contracts per day, up 21 percent over the same period last year.

Second-best year

MGEX has concluded its second-best calendar year volume of all-time, with a total volume of 2.18 million trades. The year finished with high numbers once again, falling short of last year’s all-time record of 2.31 million.

Five top 25 monthly volume records were reported throughout the year, which included the third-best monthly volume when 260,405 contracts traded on August. Nineteen daily Exchange open interest records were set during the year, including the all-time record of 87,186 set on Feb. 12.

Electronic volume also concluded the year with high numbers, coming in at 1.878 million contracts traded. The Exchange reported five top 25 monthly and three daily electronic volume records throughout the year, which included the 11th-highest daily electronic volume of 17,431 occurring on Aug. 23.

In addition to recording the second-highest annual volume, MGEX reported a total volume of 133,608 during the month of December.

This is the third consecutive year that total volume has surpassed 130,000 during December.

NFA bars firm

National Futures Association has permanently barred Eden Prairie, Minn., introducing broker Vincent Capital Group LLC (Vincent Capital) from membership and from acting as a

principal of an NFA member.

A complaint alleged that Vincent Capital failed to comply with NFA’s 2012 order to submit promotional material to NFA and failed to supervise the firm’s operations. Vincent Capital is the subject of two previous complaints issued by NFA’s BCC. In 2012, Vincent Capital was charged with making misleading sales solicitations and using misleading promotional materials, and ordered to pay a $25,000 fine and to pre-submit all promotional material to NFA for review and approval.

In 2013, Vincent Capital was charged with failure to comply with NFA’s 2012 order to submit promotional material to NFA and failure to diligently supervise the firm’s operations, and ordered to pay a $35,000 fine.

Fine assessed

Jon Corzine has agreed to pay a $5 million civil fine to settle a lawsuit by the U.S. Commodity Futures Trading Commission over the 2011 collapse of the former New Jersey governor’s brokerage, MF Global Holdings Ltd. The settlement was disclosed in a Jan. 5 filing with the U.S. District Court in Manhattan. Corzine also agreed to never again work for a futures commission merchant, or register with the CFTC in any capacity.

CORN ANALYSIS

Corn closed the week 7.75 cents higher.

Last week, private exporters did not report any private sales. Weekly export sales of corn showed a total of 16.9 million bushels (429,200 metric tons) with all for the 2016-2017 marketing year. This was below the 23.1 mb (587,000 mt) needed this week to be on pace with USDA’s December demand projection of 2.22 billion bushels.

This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2016 crop and update the demand figures. Export forecasts are nearly 325 mb above last year at this time.

In addition, ethanol usage is also well above last year’s figures, giving corn usage a nearly 1 bb advantage over last year. Traders are going to look for the USDA to increase its final 2016 corn production estimate and to increase the demand estimates as well.

The size of the increase of 2016 will be the determinate of how bullish or bearish the crop report is. Farmer selling should increase after the first of the year as farmers will need to move some corn to maintain the quality of the stored crop, but basis levels should narrow through the winter months.

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 9.75 cents lower.

Last week, private exporters did not report any private sales. Weekly export sales of soybeans showed a total of 3.2 mb (87,500 mt) with nearly all for the 2016-2017 marketing year. This was below the 8 mb (218,800 mt) needed this week to be on pace with USDA’s December demand projection of 2.05 bb.

The huge demand base for soybeans, estimated at a record 4.1 bb, comes in the form of record strong export demand and a very strong crush figure. Ending stocks are forecast to remain large at 480 mb, however the market has become used to dealing with this figure.

The market is 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. This month’s supply/demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2016 crop and update the demand figures.

Export forecasts are 115 mb above last year at this time and with the ongoing strong sales, look for the USDA to again tighten balance sheets and increase exports. Traders are going to look for the USDA to increase its final 2016 soybean production estimate and to increase the demand estimates.

Farmer selling looks to be a minimum this winter as producers are more interested in selling corn and holding onto soybeans in case another weather problem develops in South America and prices move higher.

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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