MGEX September volume report

Minneapolis Grain Exchange (MGEX) reported that the total exchange volume for September 2018 came in at 110,687 contracts. Electronically, MGEX reached a total volume of 94,197 contracts traded. Options volume was recorded at 2,966 contracts. MGEX saw an increase in open interest throughout the month. At the close of business last Friday, open interest was 70,949 contracts which is 11 percent higher than the end of August.

KORUS agreement favorable for beef and pork industries

U.S. Meat Export Federation Vice President of Communication Joe Schuele says the signing of the (Korean Free Trade Agreement) KORUS agreement is reassuring for U.S. beef and pork industries.

“On the beef side, we’ve seen our duty rate on U.S. beef entering Korea dropped to about 21 percent. That is the lowest of any beef supplier. Other beef-supplying countries like Australia, New Zealand and Canada have also reached free trade agreements with Korea. They’re paying a little bit higher rate right now because the KORUS agreement was entered into force earlier than those. If we did not have those favorable terms in place, we would once again be at a real competitive disadvantage,” said Schuele.

Cargill net earnings down from one year ago

Cargill is reporting adjusted operating earnings for the first quarter of $883 million. That’s down from $888 million one year ago. Net earnings topped $1 billion. The oilseed processing business, which includes canola, soybeans and biodiesel, had solid gains. The results in the animal nutrition and protein segment came in below a very strong quarter in 2017.

More business wanting to file claims on Kane Beef

According to court filings, nearly two dozen new businesses argue they have claim to join in the suit that alleges Kane Beef owes millions to comply with the Packers and Stockyards Act. In July, Kane Beef agreed to repay $38 million to livestock sellers after two complaints were filed against the processor for allegedly violating the Packers and Stockyards Act by failing to meet the timeframe for payments. Both complaints allege that as of June 8, 2018, the company was 38-days late on some payments, with a few up to 60 days late.

The Corpus Christi-based beef packer has been paying $500,000 a month to settle the matter, according to a report in the Corpus Christi Caller-Times. The court ordered the company to pay $500,000 a month for six months, and failure to do so would mean the court could appoint a receiver to manage Kane Beef’s financial affairs. Additionally, Kane Beef had amassed a $2.4 million utilities bill with the city of Corpus Christi. In May, city officials and Kane Beef negotiated a payment plan, and the company is current on payments to resolve that debt. The Corpus Christi Caller-Times also reported Kane Beef owed another $400,000 in unpaid property taxes, of which $331,840 remains unpaid. The company has until Jan. 31 to pay those property taxes in full to remain within the terms of the payment agreement.

Corn analysis

Corn closed the week $.11 1/2 higher. Last week, private exporters a sale of 230,000 mts sold to Japan.

In the weekly export sales report, for the week ending September 27, USDA reported 56.3 mb (1,431,000 mt) of corn export sales for 2018-19 and none for 2019-20. In 2018-19, there are 775 million bushels of total commitments, up 63 percent from a year ago.

In the weekly crop progress and conditions report; NASS reported U.S. corn crop conditions at 69 percent good/excellent versus 69 percent expected, 69 percent last week and 63 percent last year. U.S. corn harvest advanced to 26 percent complete versus 26 percent expected, 16 percent last week, 16 percent last year and 17 percent average.

In the weekly EIA report; crude oil stocks unexpectedly rose by 8.0 mil versus an expected increase of 1.5 mb. Gasoline inventories were -0.5 versus +1.3 expected and distillates were -1.8 versus -1.3 expected.

Weekly U.S. ethanol production fell to 1.015 million barrels/day (298 million gallons/week) from 1.036 mbpd (305 million gallons/week) the week prior and was the lowest in 23 weeks going back to mid-April. The October 11 USDA supply/demand report now is expected to show a production figure similar to slightly larger than last month, but ending stocks should be larger than last month due to the USDA showing larger than expected quarterly stocks.

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 $.25 higher. Last week, private exporters announced 134,000 mts of meal sold to the Philippines.

The USDA reported 55.9 mb (1,521,200 mt) of weekly soybean export sales for 2018-19 and 100,000 bushels (4,000 mt) for 2019-20. There are 742 mb of total commitments, down 13 percent from a year ago.

In the weekly crop progress and conditions report, U.S. soybean crop conditions were 68 percent good/excellent versus 68 percent expected, 68 percent last week and 60 percent last year.

U.S. soybean harvest moved to 23 percent complete versus 27 percent expected, 14 percent last week, 20 percent last year and 20 percent average.

This month’s supply/demand report should leave production figures as well as ending stocks nearly unchanged to slightly larger compared to a month ago. Production could increase, but demand, due to exports, should also increase, resulting in a flat ending stocks figure. Unless dryness develops in South America, producers should anticipate very choppy trade with large supplies capping rallies as well as the lack of progress with China.

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.