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BRIAN HOOPS

By Staff | Nov 17, 2017

Cargill Inc., one of the world’s biggest agricultural trading houses, is shaking up its risk management division after the company was forced to pay a $10 million fine for misleading customers.

The U.S. Commodity Futures Trading Commission said Minneapolis-based Cargill hid as much as 90 percent of the its markup on swap transactions with counter-parties. Full disclosure of information is required under the Commodity Exchange Act and commission regulations, the CFTC said in an emailed statement .

Cargill, in a separate statement, said it would immediately revise customer reporting, enhance internal controls and improve employee training.

The government said the company failed to supervise employees. Cargill executed some swaps based on prices on its ProPricing grain market program and “on occasion” inaccurately reported information to counter-parties, the commission said.

Corn analysis

Corn closed the week 5 1/2 cents lower. Last week, private exporters announced sales of 130,000 mts of corn to

an unknown destination.

Weekly export sales of corn showed a total of 115.7 mb (2,938,700 mt) with 93.1 mb (2,364,500 mt) for the 2017-2018 marketing year. This put total marketing year sales at 763.5 mb, 25 percent less than the previous marketing year. In the weekly crop progress report, NASS reported U.S. corn harvest advanced to 70 percent complete versus 70 percent expected (67-75 percent range of ideas), 54 percent last week and 83 percent on average.

Weekly ethanol data shows that for the week ended November 3rd, ethanol production averaged 1,057 thousand barrels per day compared to 1,056 thousand barrels per day in the week prior. Stocks data showed a 129,000 barrel draw to 21.325 million barrels.

The USDA’s WASDE report showed an increased corn yield to 175.4 bpa vs the October report’s 171.8 bpa. If realized, this would be the highest national average yield ever, topping the yield record from last year at 174.6 bpa. U.S. corn production is estimated at 14.578 billion bushels versus the October report of 14.280 billion bushels. The U.S. corn carryout is expected to total 2.487 billion bushels, an increase over the October WASDE report’s estimate of 2.295 billion bushels. The USDA also surprisingly increased exports by 75 mb to keep ending stocks below 2.500 bb. The 2017/18 world corn carryout is expected to total 203.86 million metric tons versus the October report’s estimate of 200.96 million metric tons.

Strategy and outlook

Producers should only make sales that address cash flow need during harvest, store balance of production and sell the carry. Do not store in commercial storage facilities.

Soybean analysis

Soybeans closed the week $.00 3/4 higher. Last week, private exporters did not report any private sales. Weekly export sales of soybeans showed a total of 42.7 mb (1,161,000 mt) nearly all for the 2017-2018 marketing year. This put total marketing year sales at 1.157 bb, 15 percent less than the previous marketing year. In the weekly crop progress report, NASS reported U.S. soybean harvest is now 90 percent complete versus 91 percent expected (90-94 percent range of ideas), 83 percent last week and 91 percent average. In the monthly supply/demand report, United States soybean yield was left unchanged from last month at 49.5 bushels per acre.

U.S. soybean production is estimated at 4.425 billion bushels versus the October report’s 4.231 billion bushels. The U.S. soybean carryout is expected to total 425 million bushels, a slight decrease of 430 million bushels from October. The 2017/18 world soybean carryout is expected to total 97.9 million metric tons versus the October report’s estimate of 94.86 million metric tons. 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.

Strategy and outlook

Producers should have made sales that address cash flow need during harvest. Do not store soybeans in commercial storage.

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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