Civil complaint filed agaist Hennesseys

Members of the Ashby Farmers Cooperative Elevator in Ashby, Minnesota filed a civil complaint against their former general manager Jerry Hennessey and his wife Becky last week.

The complaint details the purchases Hennessey made using funds from the co-op, including paying more than $1.13 million to the Cabela’s Club Visa card over the course of the fraud. Payment of this and other credit card bills were coded as purchase of soybeans, wheat or corn. The cooperative is asking for close to $5 million in actual damages from Hennessey and his wife imposing a trust of at least $215,000 on their home and awarding the co-op costs, disbursements and attorney’s fees allowed by law.

Maschoffs hault U.S. projects

Ken Maschhoff, chairman of the largest U.S. family-owned pork producer, has watched profits fall as trade tensions rise between the United States and China. His company, The Maschhoffs, has halted U.S. projects worth up to $30 million and may move some operations overseas. Investing in domestic operations now would be “ludicrous” as China and others retaliate against U.S. agricultural goods, Maschhoff said from the firm’s Carlyle, Illinois headquarters.

Mizuhu Capital fined

NFA has ordered New York, NY swap dealer Mizuho Capital Markets LLC (Mizuho Capital) to pay a $900,000 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 Mizuho Capital. The BCC found that Mizuho Capital used inadequate processes to assess the risks of its uncleared swaps and back test, benchmark and validate its margin model. The BCC also found that Mizuho Capital failed to take the necessary steps to satisfy the initial margin and variation margin collection requirements, failed to supervise diligently its business activities related to margin and model monitoring, and repeatedly submitted inaccurate, incomplete and inconsistent information in reports provided to NFA.

Corn analysis

Corn closed the week $.02 1/2 higher. Last week, private exporters announced sale of 200,900 mts of corn to Mexico.

For the week ending October 25, USDA reported 15.5 mb (394,400 mt) of corn export sales for 2018-19 and 200,000 bushel (5,000 mt) for 2019-20. Total commitments of 859 million bushels in 2018-19 are up 28 percent from a year ago.

In the weekly crop progress and conditions report, NASS reported U.S. corn harvest at 63 percent complete versus 64 percent expected, 49 percent last week, 52 percent last year and 63 percent average.

IU.S. ethanol production, for the week ended 10/26/18 solidly rose to 1.059 million barrels/day (311 million gallons/week) from 1.024 mbpd (301 mil gal/week) the week prior, with the 35k bpd increase being the largest weekly production rise in 12 weeks and the 2nd largest of the last 26 weeks. Crude oil inventories showed a build up in inventories of 3.2 million barrels, near expectations. Producers should combine the bulk of the US corn over the next three weeks.

The November supply/demand report will likely show a slightly smaller corn crop compared to a month ago and smaller ending stocks. Farmer selling will slow when harvest is complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter. The huge demand base is the largest on record. With a strong demand base and corn now locked away in farmer storage, the corn market will need to bid for acres this spring to rebuild the ending stocks at a more comfortable level.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months and use options to re-own.

Soybeans analysis

Soybeans closed the week $.29 1/4 higher. Last week, private exporters announced sale of 120,000 mts of soybeans to an unknown destination.

The USDA reported 14.5 mb (395,800 mt) of weekly soybean export sales for 2018-19 and 2.2 mb (60,000 mt) for 2019-20.

Total commitments of 788 mb in 2018-19 are down 29 percent from a year ago.

In the weekly crop progress and conditions report, U.S. soybean harvest advanced to 72 percent complete versus 70 percent expected, 53 percent last week, 81 percent last year and 81 percent average.

The November supply/demand report will likely show a slightly smaller soybean crop compared to a month ago and a reduction in the ending stocks, although they will remain record large. Farmer selling will slow now that harvest is nearly complete, basis levels will likely improve and the cash market should rally as it will be the only way to pry cash crop out of farmers hands with stronger basis levels throughout the winter. The market will be anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter. Weather during the South American growing season will be closely watched as well as negotiations with China.

Strategy and outlook

Plan on storing as much crop as possible this fall. Now look to sell the carry for spring or summer months and use options to re-own.

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.