CME member charged

On April 4, 2018, a Panel of the Chicago Mercantile Exchange (“CME”) Probable Cause Committee (“PCC”) charged member Coby D. Tresner (“Tresner”) with violating CME Rules 432. R., T., and U. based on allegations that on one or more occasions between December 2014, and March 2015, Tresner engaged in dishonorable conduct and accepted or transmitted a customer order that had not been specifically authorized.

Specifically, despite the absence of an executed power of attorney or similar document, Tresner entered orders to buy and sell Feeder Cattle, Live Cattle, and E-Mini S&P Futures contracts for customer accounts without the account owners’ knowledge, permission, or authority to do so.

As a result of this activity, Tresner caused more than $106,000 in losses for the customers’ accounts. Additionally, Tresner failed to comply with a final arbitration order from February 21, 2017, which directed Tresner to pay an award of $143,361.12. The Panel ordered Tresner to pay a fine in the amount of $150,000, restitution in the amount of $106,017.77, to pay the final arbitration award of $143,361.12, and to have his access to all CME Group trading floors and direct and indirect access to all electronic trading and clearing platforms owned or controlled by CME Group, and affiliation with, employment by, or association with a Member (as this term is defined in Rule 400) or affiliate of a Member of any CME Group Exchange permanently barred.

Cattle ranchers pardoned

President Donald Trump has granted two full pardons for Oregon cattle rancher Dwight Hammond, Jr. and his son, Steven Hammond. In 2012, the Hammonds were convicted of arson for fires that burned a portion public grazing lands in 2001 and 2006.

A White House statement says “the evidence at trial regarding the Hammonds’ responsibility for the fire was conflicting, and the jury acquitted them on most of the charges.”

The National Cattlemen’s Beef Association and the Public Lands Council praised President Trump’s pardon of the ranchers.

CHS seeing better days

In the third quarter, the nation’s largest farm cooperative enjoyed a significantly better financial situation. CHS had net earnings of $229 million, which compares to a loss of $45 million one year ago. When Jay Debertin took over as president and CEO just over one year ago, he said CHS would concentrate on its core business segments.

“Those core areas are global grain, energy, processing and agronomy,” said Debertin. “We looked at all of the businesses across CHS and looked at the strategic fit and how they link with our four core businesses. We exited some businesses or selling some assets.”

That includes the sale of the CHS insurance subsidiary, a refined fuels terminal and pipeline at Council Bluffs and 34 convenience stores in the Pacific Northwest. For the first nine months of the fiscal year, CHS reports net income of $576 million, up from $178 million last year.

Net earnings up for Cargill

Cargill is reporting net earnings for 2018 of $3.1 billion. That’s up nine percent from last year. For the fourth quarter, net earnings totaled $711 million, more than double last year’s $347 million. Cargill’s animal nutrition and protein segments were the largest part of the company’s earnings in the fourth quarter and in the past year. The company’s grain trading business had its strongest fourth-quarter in seven years.

Corn analysis

Corn closed the week $.14 3/4 higher. Last week, private exporters did not announce any private sales.

Weekly export sales of corn totaled 55.7 mb (1,415,500 mt) as of July 12 with 25.2 mb (641,000 mt) for the 2017-18 season. Total shipments plus outstanding sales in 2017-18 are now 2.312 bb, 4 percent above the previous marketing year. In the weekly crop conditions report, U.S. corn crop conditions were reported at 72 percent good/excellent versus 74 percent expected, 75 percent last week and 64 percent last year. 63 percent of the crop is silking versus 37 percent on average.

In the weekly EIA report, weekly ethanol production was up 31,000 barrels per day at 1.064 million barrels per day from 1.033 million barrels per day a week ago. Crude oil stocks saw an increase of 5.8 million barrels versus an expected drawdown of 4.1 million barrels. Traders are understandably nervous being short and some mild short covering is lifting prices into the end of the month. Good growing conditions will limit the upside for corn as the USDA is expected to increase corn yields in the August supply/demand report.

Strategy and outlook

Producers should have either made sales or bought puts to establish a price floor. Exit these options when the trend turns higher and re-own sales with cheap out of the money calls

Soybeans analysis

Soybeans closed the week $.31 1/2 higher. Last week, private exporters announced sale of 199,500 mts of soybeans to Pakistan.

Weekly export sales of soybeans totaled 31.8 mb (865,700 mt) with 9.3 mb (250,300 mt) for the 2017-18 marketing year. Total shipments plus outstanding sales are now 2.120 bb, 4 percent less than a year ago.

In the weekly crop progress and conditions report, U.S. soybean crop conditions declined to 69 percent good/excellent versus 70 percent expected from 71 percent last week but is still above the 61 percent last year. 26 percent of the soybean crop is setting pods versus 11 percent on average.

NOPA crush came in at 159.228 mb versus estimates of 159.6 mb. Last month was 163.6 mb and a year ago in June crush was 138.1 mb. This is a 3 percent decline month over month, but still a record crush for the month of June. Oil stocks were seen at 1.766 billion pounds, down from 1.856 billion pounds last month. Rain events that occur in late July and the first week of August should be sold as this will help the development of the crop. Soybeans are a crop of August and a hot and dry August should send soybean prices sharply higher.

Even though ending stocks look large, a resolution of a trade agreement will usher in demand for U.S. products and sharply reduce stocks.

Strategy and outlook

Producers should have either made sales or bought puts to establish a price floor. Exit these options when the trend turns higher and re-own sales with cheap out of the money calls.

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.