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BRIAN HOOPS

By Staff | Sep 28, 2018

NFA news

The National Futures Association (NFA) has barred John Marc Schwaebe from NFA membership for seven years and from acting as a principal of an NFA Member for nine years. Schwaebe was an associated person (AP) at the Carlsbad, Calif. branch office of an NFA Member introducing broker (IB). The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by Schwaebe. The BCC found that Schwaebe assisted a former NFA Associate in perpetrating a trade allocation scheme. The BCC also found that Schwaebe failed to comply with the terms of a Member Responsibility Action (MRA) issued by NFA’s Executive Committee, by assisting the former NFA Associate in circumventing the restrictions imposed by the MRA.

NFA has ordered Chicago, Ill. introducing broker Global Asset Advisors LLC and its principal and associated person Glenn A. Swanson to jointly pay a $200,000 fine. NFA also ordered Global Asset Advisors’ principal and associated person Kenneth S. Packard to pay a $35,000 fine. The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC, and a settlement offer submitted by Global Asset Advisors, Swanson and Packard. The BCC found that Global Asset Advisors, Swanson and Packard failed to adequately supervise the firm’s operations and its employees to monitor for, and detect, unusual allocation activity and to prevent violations of a Member Responsibility Action issued by NFA.

Packer trading activities investigated

The Commodity Futures Trading Commission (CFTC) has been asked to investigate packer trading activities on specific dates spanning the past six years. R-CALF USA stated it identified numerous anomalies in the cattle futures market and suspects packers were making trades in the futures market to drive cash cattle prices downward. R-CALF USA made the request as a follow-up to previous requests made by the industry in previous years. The Governmental Accountability Office did release an evaluation earlier this year and reviewed work that the Chicago Mercantile Exchange and CFTC had done in the futures market and “did not find evidence of trading irregularities in the cattle futures market in 2015.”

Cooperative closes due to mishandling of funds

A former grain elevator manager is on the run after allegedly pocketing $2 million from the Ashby Farmers Cooperative Elevator Co. in west-central Minnesota. Jerry Hennessey used the money for hunting trips, taxidermy and paying his personal Cabela’s credit card. Initial investigations show Hennessey had been siphoning off funds while inflating grain inventories from the single-location grain co-op for at least a decade. But the issue came to head earlier this month and forced the co-op, which was established 110 years ago, to stop taking grain deliveries and close for business. The co-op’s board is now actively seeking acquirers for the facility and business.

Corn analysis

Corn closed the week $.06 1/4 higher. Last week, private exporters a sale of 160,000 mts sold to Mexico and 121,700 mts of corn to an unknown destination.

In the weekly export sales report; the USDA reported 54.5 mb (1,383,700 mt) of corn export sales for 2018-19 and 400,000 bushels (9,700 mt) for 2019-20. In 2018-19, new outstanding sales plus shipments totaled 652 million bushels, up 50 percent from a year ago. In the weekly crop progress and conditions report; U.S. corn crop conditions were unchanged from the prior week at 68 percent good/excellent versus 68 percent expected and 61 percent last year. U.S. corn harvest advanced to 9 percent complete versus 10 percent expected, up from 5 percent last week versus 7 percent last year and 6 percent average.

In the weekly EIA report, crude oil stocks showed a drawdown of 2.1 mb vs an expected drawdown of 2.5 mb. Distillates +0.8 vs +1.5 expected and Gasoline -1.7 vs +0.1 expected. Ethanol production rose to 1,051,000 bpd vs 1,020,000 bpd the prior week. Informa updated their 2019 acreage estimates with corn at 93.0 million acres vs 89.1 million in 2018.

Strategy and outlook

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

Soybeans analysis

Soybeans closed the week $.19 1/4 higher. Last week, private exporters announced 241,000 mts of soybeans sold to an unknown destination and 100,000 of meal to an unknown destination.

In the weekly export sales report; USDA reported 33.7 mb (917,600 mt) of weekly soybean export sales for 2018-19 and 2.9 mb (80,000 mt) for 2019-20. New outstanding sales plus shipments totaled 659 mb, down 7 percent from a year ago. In the weekly crop progress and conditions report, U.S. soybean crop conditions dropped 1 percent to 67 percent good/excellent versus 68 percent expected, 68 percent last week and 59 percent last year.

U.S. soybean harvest moved to 6 percent complete versus 5 percent expected, 4 percent last year and 3 percent average. The NOPA August soybean crush report showed its members crushed 158.9 million bushels of soybeans in the month of August, sharply below average market expectations of 163.9 million (160.0-167.5 million range of ideas) and down from July’s 167.7 million bushels. This was still a very solid 11.6 percent above last year’s August NOPA crush of 142.4 million bushels. Soyoil stocks were down to 1.623 billion lbs vs expectations for 1.762 billion lbs.

Informa estimated 2019 U.S. soybean acres at 82.3 million versus 88.97 million in 2018.

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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