In the news:
Combine sales see increase
The latest report from the Association of Equipment Manufacturers shows increased combine sales.
U.S. retail sales of combines increased nearly 59 percent last month, compared to April of 2017. However, total tractor sales in the U.S. rose less than one percent versus this time last year. AEM Senior Vice President of Ag Services Curt Blades notes that the downward trend in net farm income “is a concern.” Blades adds there is still uncertainty with the year one-third over.
Pursuant to an offer of settlement in which David Campanile neither admitted nor denied the rule violations upon which the penalty is based, on May 23, 2018, a Panel of the Chicago Mercantile Exchange Business Conduct Committee found that on multiple occasions between October 24, 2016, and June 16, 2017, Campanile entered and canceled orders in the Lean Hogs futures market on the Globex electronic trading platform during the pre-opening period that were not entered for the purpose of executing bona fide transactions, but for the purpose of identifying the depth of the order book.
The entry and cancellation of these orders caused fluctuations in the publicly displayed Indicative Opening Price.
The panel ordered Campanile to pay a fine of $10,000. The Panel also suspended Campanile from access to any CME Group trading floor and direct and indirect access to all electronic trading and clearing platforms owned or operated by CME Group for 20 business days.
Farm bill back up for vote in June
The U.S. House of Representatives will vote for a second time on a massive farm bill after the measure was defeated last week, the No. 3 Republican in the chamber said, according to Roll Call newspaper.
The vote on the $867 billion bill will be held on June 22, Republican Representative Steve Scalise said, Roll Call reported. Prior to the farm bill vote, the House will consider a conservative immigration bill sponsored by House Judiciary Committee Chairman Bob Goodlatte and House Homeland Security Committee Chairman Michael McCaul, Roll Call quoted Scalise as saying.
Corn closed the week $.04 3/4 higher. Last week, private exporters announced sale of 140,000 mts of corn to Saudi Arabia and a cancelation of 132,000 mts of sorghum sold to China.
Weekly export sales of corn showed a total of 44.4 mb (1,127,700 mt) with 33.6 mb (854,300 mt) for the 2017-2018 marketing year. This put total marketing year sales at 2.105 bb, even with the previous marketing year.
In the weekly crop progress report, NASS reported U.S. corn planting 81 percent complete versus 80 percent expected, up from 62 percent last week versus 82 percent last year and 81 percent average.
Corn emergence is 50 percent versus 47 percent on average.
In the weekly EIA report, weekly ethanol production decreased 30k barrels per day to 1.028 million barrels per day.
During June, the outlook for prices depends on weather and how it impacts the emerging crops. The only other supply side news the market will deal with is the June 12 USDA monthly supply/demand crop report. The trade will want to be bullish as the key pollination time period is directly ahead of the market, however, it will take weather concerns during June to ignite a rally. Producers will want to use options as a way to manage risk and provide price insurance. This will enable producers to make sales and cover the upside if weather is adverse.
The end of the month will also have the quarterly stocks and planting intentions report from the USDA.
This report could be a shocker to the market as some reports have farmers decreasing seeded acres from the last report in March due to some late seeding in the upper Midwest. Seasonal highs are usually formed by June 23.
Strategy and outlook
Producers should have either made sales and re-owned with call options or buy puts to establish a price floor.
Soybeans closed the week $.44 1/4 higher. Last week, private exporters reported sales of 264,000 mts of soybeans to an unknown destination, 312,000 mts of soybeans to China and 165,000 mts of optional origin soybean sales to China.
Weekly export sales of soybeans showed a total cancellations of 4.9 mb (132,600 mt) including cancellations of 5.1 mb (139,500 mt) for the 2017- 2018 marketing year. This put total marketing year sales at 2.028 bb, 5 percent less than the previous marketing year. In the weekly crop progress and conditions report, U.S. soybean planting reached 56 percent complete versus 54 percent expected, 35 percent last week, 50 percent last year and 44 percent average.
Soybean emergence is 26 percent versus 15 percent on average. The month of June looks to be similar to corn as we are in a weather market and weather forecasts will be the primary driving force. The crop looks to be seeded before June 15 leaving beans to spend the rest of June developing its root system. 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.
Like the corn market, producers should use options as a risk management tool and price insurance. 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.
The acreage report at the end of the month could be a shocker to the trade as additional soybean acres are likely to be seeded. Seasonal highs are usually formed by June 23.
Strategy and outlook
Producers should have been making sales and reown with call options or buy puts to establish a price floor.
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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