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BRIAN HOOPS

By Staff | Mar 16, 2018

The Minneapolis Grain Exchange announces the 25th-best Monthly Exchange Volume Record in the history of MGEX with 205,226 contracts. This will be the fifth February to be listed with the top 25 Monthly Exchange Volume Records.

Additionally, February’s electronic record volume has climbed to 182,364 contracts. This number broke into the historic top 25 records taking the 21st place record and bumping April of 2016 down to MGEX’s 22nd record with 180,823 contracts.

With two new top 25 records and open interest at 59,350 contracts, the Exchange is excited to carry the present momentum into March.

Corn analysis

Corn closed the week $.06 higher. Last week, private exporters announced sales of 260,000 mts of corn to an unknown destination and 110,000 mts corn to Japan.

Weekly export sales of corn showed a total of 75.9 mb (1,927,900 mt) with 73.1 mb (1,857,600 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.619 bb, 7 percent less than the previous marketing year. The weekly EIA report showed crude oil stocks up 2.4 million barrels vs an increase of 3.0 million barrels that was expected. Also, Gas stocks down 0.8 vs an expected increase of 1.5 and weekly ethanol production at 1,057,000 bpd vs 1,044,000 bpd last week. In the March supply/demand report, U.S. corn ending stocks fell 225 mb, thanks to an increase in U.S. export forecast to 2.225 mb and a 50 mb increase in ethanol demand.

This places total U.S. demand for corn at 14.820 bb, outpacing our production in 2017 of 14.604 bb. This record demand places increased emphasis on producers to plant enough acres this spring to meet the demand.

While the U.S. still has a large supply/carry in cushion, this could quickly evaporate if the U.S. production is down sharply from prior years. Corn production in Brazil was slightly lower than last month at 94.5 mmts vs. 95.0 mmt with Argentine corn production lowered to 36.0 mmts from 39.0 mmts a month ago.

Strategy and outlook

As prices rally during the winter months, producers look to sell the carry and lock in basis as it narrows. You can replace ownership with option or futures strategies. Producers should be making new crop sales on this rally.

Soybean analysis

Soybeans closed the week $.33 1/4 lower. Last week, private exporters announced sale of 205,000 mts of soybeans to an unknown destination and 303,000 mts of soybeans to China.

Weekly export sales of soybeans showed a total of 97.5 mb (2,653,400 mt) with 92.2 mb (2,509,500 mt) for the 2017-2018 marketing year. This put total marketing year sales at 1.764 bb, 9 percent less than the previous marketing year. In the monthly supply/demand report, soybeans had a bearish report with ending stocks increased 25 mb to 555 mb as USDA lowered the export forecast 25 mb to 2.065 bb. Brazil’s soybean crop increased to 113.0 mmts from 112.00 mmts last month while Argentina’s bean crop was lowered to 47.0 mmts from 54.0 mmts a month ago. 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.

With the South American growing season effectively over as well as an expectation for an increase in U.S. seeded acres in 2018, look for prices to work lower into the March 31 stocks and acreage report.

Strategy and outlook

As prices rally, producers look to sell the carry and lock in basis as it narrows. You can replace ownership with option or futures strategies. Producers should be making new crop sales and hedges.???

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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