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BRIAN HOOPS

By Staff | Oct 19, 2018

Canada to grade U.S. wheat imports same as their own

The new U.S.-Canada-Mexico trade agreement addresses the discrimination U.S. farmers face when selling wheat north of the border. U.S. wheat can only be sold in Canada as feed wheat.

“In trade terms, we say that does not meet the terms for national treatment,” said Gregg Doud, chief agricultural trade negotiator. “In other words, they have to treat our wheat the same as their wheat if it is the same quality.”

Doud said Canada has now agreed to grade U.S. wheat imports no less favorably than Canadian wheat.

“A North Dakota farmer should be able to use a Canadian elevator across the border now if he wants to do that,” said Doud.

Ashby Farmers Elevator Company re-opens

Less than three weeks after its closure, the Ashby Farmers Elevator Company is back in business. The Wheaton Dumont Elevator Company, which is based in Wheaton, Minnesota, is leasing the failed cooperative. A special meeting will be held for the members of Ashby Farmers Elevator Cooperative on October 15 to consider leasing, selling or dissolving the co-op. The former manager of the Ashby co-op, Jerry Hennessey, is being investigating for embezzling millions of dollars.

CFTC charged in spoofing

The Commodity Futures Trading Commission (CFTC) issued an order filing and settling charges against Geneva Trading USA, LLC(Geneva), a proprietary trading firm in Chicago, Illinois, for engaging in the disruptive trading practice of “spoofing.”

The order finds that Geneva engaged in this activity through three of its employees identified in the order as Trader A, Trader B, and Trader C. The order requires Geneva to pay a $1.5 million civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.

Corn analysis

Corn closed the week $.05 1/4 higher. Last week, private exporters announced a cancelation of 140,000 mts of corn previously sold to an unknown destination.

In the weekly export sales report, for the week ending October 4, USDA reported 39.6 mb (1,006,700 mt) of corn export sales for 2018-19 and none for 2019-20. In 2018-19, there are 815 million bushels of total commitments, up 51 percent from a year ago.

In the weekly crop progress and conditions report; NASS reported 2018 U.S. corn crop conditions at 68 percent good/excellent versus 68 percent expected, down 1 percent from 69 percent last week but still higher than 64 percent last year.

U.S. corn harvest advanced to 34 percent complete versus 34 percent expected, up from 26 percent last week and ahead of 16 percent last year and 21 percent average.

In the weekly EIA report; crude oil stocks once again showed a huge increase compared to trade estimates. Stocks of 409.95 mb were 5.99 mb larger than trade estimates, although remain below the 3 year average of 455.12 mb. U.S. ethanol production rose to 1.040 million barrels/day (306 million gallons/week) from 1.015 mbpd (298 mil gal/week) the week prior and was a substantial 7.5 percent above last year’s same-week production of 967 mbpd.

In the October supply/demand report, corn production was a surprise to the trade, coming in slightly lower compared to expectations and down .6 bpa from the September report at 180.7 bpa and 4.1 bpa larger than a year ago. If yields are realized, this would be the highest yield and second highest production in history for the U.S.

Production of 14.778 bb will not be enough to meet the USDA forecasted demand of 15.155 bb. Exports were increased by 75 mb from last month to 2.475 bb. Export demand should be increased in future reports as corn inspections are running well ahead of last year’s pace. Ending stocks of 1.813 bb are well below last year’s 2.140 bb, despite producing a crop that is 174 mb larger than last year. Ending stocks should fall in subsequent reports as the USDA raises export forecasts.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months.

Soybeans analysis

Soybeans closed the week $.01 3/4 lower. Last week, private exporters did not announce any sales.

The USDA reported 16.2 mb (439,700 mt) of weekly soybean export sales for 2018-19 and 100,000 bushels (4,600 mt) for 2019-20. There are 191 mb of total commitments, down 18 percent from a year ago. In the weekly crop progress and conditions report, U.S. soybean crop conditions were unchanged at 68 percent good/excellent versus 67 percent expected, 68 percent last week and 61 percent last year.

U.S. soybean harvest moved to 32 percent complete versus 35 percent expected but ahead of 23 percent last week, although behind the 34 percent last year and 36 percent average.

The monthly supply/demand report showed soybean production forecast at a record 4.69 bb, down slightly from September but up from last year. Yields are expected to average a record 53.1 bpa, up .3 bpa from last month and 3.8 bpa from last year. Harvested acres are expected to be down 600,000 acres. Usage was left unchanged from the prior month at 4.268 bb as production of 4.690 bb easily outpaces demand. A new trade agreement with China is imperative to see an improvement in demand and a reduction in the burdensome ending stocks of 885 mb. This figure could easily increase in subsequent reports as demand slows compared to last year.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months.

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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BRIAN HOOPS

By Staff | Oct 19, 2018

Canada to grade U.S. wheat imports same as their own

The new U.S.-Canada-Mexico trade agreement addresses the discrimination U.S. farmers face when selling wheat north of the border. U.S. wheat can only be sold in Canada as feed wheat.

“In trade terms, we say that does not meet the terms for national treatment,” said Gregg Doud, chief agricultural trade negotiator. “In other words, they have to treat our wheat the same as their wheat if it is the same quality.”

Doud said Canada has now agreed to grade U.S. wheat imports no less favorably than Canadian wheat.

“A North Dakota farmer should be able to use a Canadian elevator across the border now if he wants to do that,” said Doud.

Ashby Farmers Elevator Company re-opens

Less than three weeks after its closure, the Ashby Farmers Elevator Company is back in business. The Wheaton Dumont Elevator Company, which is based in Wheaton, Minnesota, is leasing the failed cooperative. A special meeting will be held for the members of Ashby Farmers Elevator Cooperative on October 15 to consider leasing, selling or dissolving the co-op. The former manager of the Ashby co-op, Jerry Hennessey, is being investigating for embezzling millions of dollars.

CFTC charged in spoofing

The Commodity Futures Trading Commission (CFTC) issued an order filing and settling charges against Geneva Trading USA, LLC(Geneva), a proprietary trading firm in Chicago, Illinois, for engaging in the disruptive trading practice of “spoofing.”

The order finds that Geneva engaged in this activity through three of its employees identified in the order as Trader A, Trader B, and Trader C. The order requires Geneva to pay a $1.5 million civil monetary penalty and to cease and desist from violating the Commodity Exchange Act’s prohibition against spoofing.

Corn analysis

Corn closed the week $.05 1/4 higher. Last week, private exporters announced a cancelation of 140,000 mts of corn previously sold to an unknown destination.

In the weekly export sales report, for the week ending October 4, USDA reported 39.6 mb (1,006,700 mt) of corn export sales for 2018-19 and none for 2019-20. In 2018-19, there are 815 million bushels of total commitments, up 51 percent from a year ago.

In the weekly crop progress and conditions report; NASS reported 2018 U.S. corn crop conditions at 68 percent good/excellent versus 68 percent expected, down 1 percent from 69 percent last week but still higher than 64 percent last year.

U.S. corn harvest advanced to 34 percent complete versus 34 percent expected, up from 26 percent last week and ahead of 16 percent last year and 21 percent average.

In the weekly EIA report; crude oil stocks once again showed a huge increase compared to trade estimates. Stocks of 409.95 mb were 5.99 mb larger than trade estimates, although remain below the 3 year average of 455.12 mb. U.S. ethanol production rose to 1.040 million barrels/day (306 million gallons/week) from 1.015 mbpd (298 mil gal/week) the week prior and was a substantial 7.5 percent above last year’s same-week production of 967 mbpd.

In the October supply/demand report, corn production was a surprise to the trade, coming in slightly lower compared to expectations and down .6 bpa from the September report at 180.7 bpa and 4.1 bpa larger than a year ago. If yields are realized, this would be the highest yield and second highest production in history for the U.S.

Production of 14.778 bb will not be enough to meet the USDA forecasted demand of 15.155 bb. Exports were increased by 75 mb from last month to 2.475 bb. Export demand should be increased in future reports as corn inspections are running well ahead of last year’s pace. Ending stocks of 1.813 bb are well below last year’s 2.140 bb, despite producing a crop that is 174 mb larger than last year. Ending stocks should fall in subsequent reports as the USDA raises export forecasts.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months.

Soybeans analysis

Soybeans closed the week $.01 3/4 lower. Last week, private exporters did not announce any sales.

The USDA reported 16.2 mb (439,700 mt) of weekly soybean export sales for 2018-19 and 100,000 bushels (4,600 mt) for 2019-20. There are 191 mb of total commitments, down 18 percent from a year ago. In the weekly crop progress and conditions report, U.S. soybean crop conditions were unchanged at 68 percent good/excellent versus 67 percent expected, 68 percent last week and 61 percent last year.

U.S. soybean harvest moved to 32 percent complete versus 35 percent expected but ahead of 23 percent last week, although behind the 34 percent last year and 36 percent average.

The monthly supply/demand report showed soybean production forecast at a record 4.69 bb, down slightly from September but up from last year. Yields are expected to average a record 53.1 bpa, up .3 bpa from last month and 3.8 bpa from last year. Harvested acres are expected to be down 600,000 acres. Usage was left unchanged from the prior month at 4.268 bb as production of 4.690 bb easily outpaces demand. A new trade agreement with China is imperative to see an improvement in demand and a reduction in the burdensome ending stocks of 885 mb. This figure could easily increase in subsequent reports as demand slows compared to last year.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months.

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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