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By Staff | Sep 21, 2018

Man accused of selling cattle he did not own

A former ranch employee in Texas has been accused by federal authorities of allegedly selling cattle over the internet that were not his to sell. On Aug. 21, a grand jury indicted Stewart Kile Williams on four counts of wire fraud and one count of aggravated identity theft. According to court records, Williams pleaded not guilty to the charges and was granted bail of $50,000 bail with a 10-percent deposit by U.S. Magistrate Judge Ronald G. Morgan.

Williams is alleged to have defrauded Jones Alto Colorado Ranch, his former employer, via fraudulent cattle sales to Wyatt Ranches of Texas resulting in a profit for himself. Jones Alto Colorado Ranch is located in Encino, Texas. However, the court case is being held in Brownsville because the ranch’s corporate headquarters are located there. Court records indicate that the Jones Ranch sold cattle to the Wyatt Ranch in 2015. The transfer of cattle was managed by Williams. It is alleged that Williams told the Jones Ranch that the Wyatt Ranch wanted to purchase additional cattle. However, this was not true and Williams proceed to send emails using another person’s identity in an effort to back up his claim that the Wyatt Ranch wanted more cattle.

US trade deficit widens

The U.S. trade deficit has not been this wide since 2015. In July, the trade gap increased more than nine percent to $50 billion. Exports suffered with a $682 million decline in U.S. soybean trade. Year-to-date, U.S. soybean shipments are up 43 percent from last year, but dropped 16 percent in July. That’s when the trade war between the U.S. and China began. President Donald Trump told reporters last Wednesday that trade negotiations with China will continue, but a deal is not imminent.

Strong July export numbers

China began imposing tariffs on U.S. ag products in early July. Ironically, the July export numbers were very strong. “It’s the best July that the U.S. has seen as far as the value of ag exports go,” said USDA trade economist Bryce Cook. The value of U.S ag exports totaled $11.2 billion. High value exports, like meat and dairy products, are partially responsible for the strength. So far this year, the U.S. has an agricultural trade surplus of $14.3 billion. That’s down 27 percent from last year at this time.

Fraudulent cattle sales cost stockyard $1.3 million

One of Arizona’s busiest stockyards lost $3 million in fraudulent cattle sales at the hands of an employee, federal prosecutors say. The scheme began to unravel in August 2017 when well-known rodeo cowboy Clay Parsons discovered $1.3 million missing from the accounts of the Marana Stockyards and Livestock Market, which his family has operated for nearly 30 years.

The stockyard’s line of credit also was drawn down inexplicably by nearly $2 million, according to records from U.S. District Court in Tucson and reported by the Arizona Daily Star. Court records indicate the trail of fraudulent documents led to Seth Nichols, the stockyard’s 29-year-old office manager and son of Donald Hugh Nichols, a cattle broker who had been friends with Parsons for decades.

Seth Nichols pleaded guilty to federal bank fraud in February and faces up to five years in prison. His father was indicted Aug. 22 as a co-conspirator in $1.6 million of fraudulent cattle sales at the stockyard’s auctions.

A federal prosecutor told the Arizona Daily Star the stockyard is operating “week to week” as it recovers from the fraud and Parsons has already spent $100,000 on audits and rebuilding the stockyard’s accounting system.

Seth Nichols admitted to manipulating the stockyard’s line of credit on behalf of Nichols Cattle Co., which then sold the cattle elsewhere without reimbursing the stockyard. He also admitted to sending the stockyard’s money directly to the cattle company. Seth Nichols agreed to pay restitution to the Parsons, which was capped at $3 million in his plea agreement, but those funds won’t be available until after he is sentenced Sept. 24.

Corn analysis

Corn closed the week $.16 lower. Last week, private exporters a sale of 138,000 mts sold to South Korea and 142,876 mts corn sold to Costa Rica.

In the weekly export sales report, the USDA reported 30.5 mb (774,200 mt) of weekly corn export sales for 2018-19 as of September 6. In 2018-19, new outstanding sales plus shipments totaled 597 million bushels, up 44 percent from a year ago. In the weekly crop progress and conditions report; corn conditions increased 1 percent to 68 percent g/e with 86 percent dented and 35 percent mature.

Harvest progress was at 5 percent, slightly ahead of last year and on par with the 5-year average.In weekly EIA report, crude oil stocks saw a drawdown of 5.3 mb vs. expectations of a drawdown of .8 mb. U.S. ethanol production for the week ended 9/07/18, the first week of the 2018/19 corn marketing year, plunged to 1.020 million barrels/day (300 million gallons/week) from 1.087 mbpd (320 mil gal/week) the week prior and was 2.6 percent below last year’s same-week production of 1.047 mbpd (308 mil gal/week). In the monthly supply/demand report, the USDA pegged the 2018-19 corn crop at 14.827 billion bushels with a yield of 181.3 bushels per acre. This is up 2.9 bpa from September and which boosted production by 240 mb. Last year, US corn production was estimated at 14.604 bb with a yield of 176.6 bpa. The feed, food, ethanol, and exports categories all saw increases, which totaled 125 mb and boosted overall usage to 15.100 bb. Ending stocks were increased to 1.774 bb vs. 2.002 bb a year ago. US corn stocks/use was pegged at 11.7 percent.

Strategy and outlook

Plan on storing as much crop as possible this fall and look for higher prices next summer.

Soybean analysis

Soybeans closed the week $.14 1/2 lower. Last week, private exporters announced 252,000 mts of soybeans sold to an unknown destination, 108,010 mts of beans sold to Mexico and a cancelation of 192,000 mts of beans previously sold to an unknown destination.

In the weekly export sales report; USDA reported 25.5 mb (693,500 mt) of weekly soybean export sales for 2018-19. New outstanding sales plus shipments totaled 625 mb, even with a year ago. In the weekly crop progress and conditions report, Soybean conditions increased 2 percent to 68 percent g/e after recent rain events. 31 percent of the soybean crop is reportedly dropping leaves. US soybean production was edged up slightly at 52.8 bpa from 52.4 bpa last month and 49.1 bpa a year ago. New crop US soybean ending stocks are estimated at 845 mb, up 60 mb from August and more than double last year’s 395 mb. Carryin was lowered by 35 mb amid higher old crop crush and exports. New crop crush was raised 10 mb to a record 2,070 bb. New crop exports were left unchanged.

Strategy and outlook

Plan on storing as much crop as possible this fall and look for higher prices next summer.

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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