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By Staff | Jun 16, 2017

Farmers have to deal with threats to their crops from nature all the time. Thousands of Kansans, though, argue that Syngenta AG posed an even bigger threat by failing to prevent its geneticallymodified corn seed from contaminating U.S. crops, which led to a devastating rejection of imports by Chinese officials. More than 7,000 Kansas farmers are going to trial to convince a jury the agricultural giant rushed the genetically engineered seed to market before getting import approval from China, which then stopped shipments saying the corn had been contaminated.

That move, and the farmers’ inability to regain a foothold in China once other countries filled the void, depressed corn prices for years, their suit claims. They’re seeking $200 million in lost sales, plus punitive damages.

Syngenta, which denies any wrongdoing and says its GMO seed wasn’t responsible for price drops, almost went to trial over similar claims in April. The Minnesota court had to reschedule those proceedings after it failed to seat a jury.

There are several other trials coming up, including class actions, as lawyers pursue suits on behalf of some 350,000 corn growers claiming as much as $13 billion in losses.

Corn analysis

Corn closed the week $.01 3/4 lower. Last week, private exporters did not report any private sales.

Weekly export sales of corn showed a total of 18.8 mb (475,600 mt) with 13.7 mb (348,600 mt) sold for the 2016-2017 marketing year. This was above the 7.9 mb (201,500 mt) needed this week to be on pace with USDA’s May demand projection of 2.225 bb.

In the weekly crop progress report, NASS reported U.S. corn crop conditions at 68 percent good/excellent versus 67 percent expected (64-68 percent range of ideas) and up 3 percent from last week, although this is still well below last year’s rating of 75 percent. U.S. corn planting is nearly finished as 96 percent is complete, up from 91 percent last week and 97 percent last year and 97 percent average. Historically, the USDA has made very few changes to yield forecasts from the May to the June report as it is early in the growing season and they did not make any changes in this year’s report. Incidentally, they made yield changes in 2003, 2008 and 2013. In the report, WASDE pegged 2017/18 U.S. corn carryout at 2.110 billion bushels. This is just above the average trade estimate of 2.085 bbu and unchanged from the prior month. 2016/17 ending stocks were unchanged from the prior month at 2.295 bb.

Strategy and outlook

Look to make sales and lock in prices during rallies over the next 6 weeks.

Soybeans analysis

Soybeans closed the week $.18 1/4 higher. Last week, private exporters reported sales of 321,000 mts of soybeans to unknown destinations.

Weekly export sales of soybeans showed a total of 23 mb (626,200 mt) with 22.4 mb (610,200 mt) for the 2016-2017 marketing year. This raised total sales to 2.147 bb, 5 percent above USDA’s May demand projection of 2.050 bb.

The weekly crop progress report showed NASS reported U.S. soybean planting is 83 percent complete versus 81 percent expected (78-82 percent range of ideas), 67 percent last week, 82 percent last year, 79 percent average.

Next week NASS will give the first g/e ratings for soybeans of the year. With the crop getting planted, the market will be quick to add weather premium if adverse weather develops. The month of June is not the key reproductive month for soybeans, however, the market will be quick to add a premium into prices on less than ideal weather. Rains after June 15 will be viewed as beneficial to crop development and negative for prices. However, dryness in the month of June will send prices sharply higher. This month’s WASDE report showed 495 million bushels of 2017/18 U.S. bean carryout, up from 480 mb last month. Average estimates for the U.S. bean carryout were right at 498 million bushels. World carryout is pegged at 92.22 billion bushels vs trade estimates of 89.44 billion bushels.

Strategy and outlook

Producers need to make new crop sales on rallies during the next 6 weeks as large supplies of product will be hitting the market from not only the U.S. but also from South America.

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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