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BRIAN HOOPS

By Staff | Mar 8, 2017

CME trading

CME Group announced that February 2017 average daily volume reached 18.4 million contracts, down 1 percent from a strong February 2016.

CME Group February 2017 options volume averaged 3.8 million contracts per day, up 9 percent versus February 2016, with electronic options averaging 2.2 million contracts per day, up 17 percent over the same period last year.

Open interest at the end of February was 118 million contracts, up 6 percent from the end of February 2016. Agricultural volume averaged 1.5 million contracts per day in February 2017, up 12 percent from February 2016.

MGEX trading

MGEX has concluded the month of February with a total volume of 234,693, making it the eighth-best month. This is the fourth consecutive year total volume has surpassed 200,000 during February. A total of 16 open-interest records were recorded throughout the month, including the highest open-interest total ever occurring on Feb. 13 with 95,596 which was more than double what it was five years ago.

Additionally, two daily volume records were set during the month, including the 12th-best day with a volume of 19,905 occurring on Feb. 16. Furthermore, Hard Red Spring Wheat options volume doubled compared to this time last year, finishing the month at 4,392 contracts.

Fed policy vs RFS

White House officials have spent the past two days in deliberations with billionaire refinery owner Carl Icahn about his proposal to modify federal policy on renewable fuels and with ethanol producers who oppose it, according to three people familiar with the talks. The flurry of meetings and phone calls came after Bloomberg News reported Monday that Icahn had helped broker a compromise with a leading biofuel group on reworking the program.

The report led to a surge of more than $100 million in the value of Icahn’s refinery investments. Icahn, who is also an unpaid adviser on regulations to President Donald Trump, predicted the modifications he is seeking would be made soon. He described it as “a matter of extreme urgency” that must swiftly be addressed “to avoid potential bankruptcies.” Support for the Renewable Fuel Standard and the corn-based ethanol industry is viewed as a litmus test for politicians in the Midwest, particularly Iowa, which helped elect Trump to the White House last November.

Trader barred

National Futures Association has permanently barred Los Angeles, California commodity trading advisor Nex Capital Management LLC and its sole principal and associated person, Jacob Wohl, from membership and from acting as a principal of an NFA member.

The decision, issued by an NFA hearing panel, is based on a complaint authorized by NFA’s business conduct committee on Aug. 19, 2016.

The hearing panel found that Nex Capital and Wohl willfully failed to cooperate with NFA by refusing to submit to an examination of Nex Capital.

CORN

ANALYSIS

Corn closed the week 9.25 cents higher. Last week, private exporters did not announce any private sales.

Weekly export sales for the week ending Feb. 16 were 39.7 mb of corn. Annual corn sales are 1.68 billion bushels, up 61 percent from last year. Weekly ethanol data was also very supportive as the EIA ethanol numbers showed another week of strong ethanol production.

For 17 consecutive weeks, production has exceeded 1 million barrels a day. This has led to a big build in ethanol stocks to near record levels. Stocks have increased for seven straight weeks.

In March, we should expect traders to anticipate a decrease in planted acreage in the March 31 report of 1 to 3 million acres. Corn should find strength in the last half of March and early April as the market will need to secure acres to meet record demand.

Commercial entities as well as large speculators will want to be long ahead of the growing season. Highs for corn are likely to be scored during the spring planting time

frame or very early summer as values rally to secure enough planted acres to meet record demand.

Strategy and outlook: A rally into weekly resistance was a great time to sell inventory, look to re-own on support as commercials have been big sellers lately.

SOYBEANS

ANALYSIS

Soybeans closed the week 12 cents higher. Last week, private exporters did not report any private sales.

Weekly export sales for the week ending Feb. 16 saw 16.3 mb of soybeans. For the year to date, soybean sales are 1.916 bb, up 25 percent from the previous year.

The key pod-setting stage in South America should be completed by March 15, leaving the market to remove any weather premium that may remain in values.

The next monthly USDA supply/demand report will be released on March 9 and should show very little change in U.S. ending stocks and with the South American growing season effectively over as well as an expectation for an increase in U.S. seeded acres in 2017, look for prices to work lower after the report.

In the March 31 acreage report, the trade should be expecting an increase in U.S. soybean seedings of 2 to 4 million acres. If wet growing conditions materialize this spring as forecast, corn will rally to buy acres as the market anticipate farmers will shift corn acres to soybeans.

A very wet forecast will limit the upside for soybeans.

Like with corn, technical breaks should be well supported by commercial entities as they begin to position long ahead of the growing season as they wish to extend coverage in case prices rally sharply on a weather related event.

Strategy and outlook: Maintain re-ownership strategies into the summer months.

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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