Synergistic Group LLC’s membership banned

NFA has permanently barred former Frankfort, Ill., commodity pool operator and commodity trading advisor Synergistic Group LLC (Synergistic) from membership and from acting as a principal of an NFA Member. NFA also barred its former principal and sole associated person Geoffrey Thompson from membership or from acting as a principal of an NFA Member for seven years. The Decision, issued by an NFA Hearing Panel, is based on a Complaint issued by NFA’s Business Conduct Committee and a settlement offer submitted by Synergistic and Thompson. The Complaint alleged that Synergistic and Thompson failed to cooperate promptly and fully with NFA during its attempted examination of Synergistic.

DowDupont announces fourth quarter earnings

DowDuPont is posting stronger-than-expected fourth quarter earnings. After reporting a loss in the same quarter last year, DowDuPont’s net income came in at $475 million. For the year, the company reported profits of $3.8 billion. DowDuPont officials indicated the separation of the Corteva Agriscience is on track to happen June 1.

MGEX January exchange

MGEX reported January total exchange volume at 119,256 contracts. Electronically, MGEX reached a total of 100,260 contracts traded. January’s total options volume finished at 2,949 contracts which is a 48 percent increase from December 2018.

Corn analysis

Corn closed the week $.04 lower. Last week, private exporters did not announce any export sales.

U.S. corn exports, for the week ended 1/31/19, were 35.5 million bushels and fell right in line with market expectations of 31.5-43.3 million bushels, but were down slightly from the previous week’s 38.1 million bushels.

Corn exports will need to average roughly 46.7 million bushels/week through the end of August to reach the USDA’s export projection which would be the 2nd highest ever February-August average weekly exports on record. U.S. ethanol production, for the week ended 2/01/19, plunged to 967,000 barrels/day (284 million gallons/week) from 1.012 mbpd (298 million gallons/week) the week prior and reflected the lowest weekly production rate in 121 weeks, going back to early October 2016.

Crude oil stocks saw an increase of 1.3 mb versus an expected increase of 1.9 mb. Despite the second largest crop reduction in history for the annual report, corn failed to rally as demand was cut more than expected. The USDA lowered the U.S. corn crop by 206 million bushels from the November estimate to 14.420 billion as yield was lowered 2.5 bpa to 176.4 bpa. USDA reported December 1 U.S. corn stocks at 11.952 bb, which were solidly below the average trade estimate of 12.092 bb.

Besides the 125 mb cut in feed/residual usage, the USDA also lowered corn for ethanol usage by 25 mb to 5.575 bb. Exports were left unchanged at 2.450 bb, leaving ending stocks at 1.735 bb and a 11.7 percent stocks/usage ratio. USDA did strongly raise the Argentine crop to 46.0 MMT from 42.5 MMT previously and is up sharply from last year’s 32.0 MMT (Ukraine production/exports both raised 0.5 MMT with the Brazilian crop left at 94.5 MMT and world ending stocks of 309.8 MMT ticking up from 308.8 MMT last month.

Strategy and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don’t store unpriced crop.

Soybeans analysis

Soybeans closed the week $.01 lower. Last week, private exporters announced sales of 3,801,000 mts of soybeans to China and 456,000 mts of soybeans to an unknown destination.

U.S. soybean exports last week were 35.9 million bushels, in line with market expectations of 29.4-40.4 million bushels and were little-changed from the previous week’s 34.7 million bushels. If the USDA’s projection is to be met, weekly exports would need to average roughly 34.7 million bushels/week from this point forward, 31 percent stronger than last year’s Feb-Aug average exports of 26.4 million bushels/week.

In the supply/demand report, USDA lowered the 2018/19 U.S. soybean crop to 4.544 bb from 4.600 bb previously, while the average yield moved down to 51.6 bpa from 52.1 previously. Despite the reduction, the 4.544 bb crop still easily set a new record.

The December 1 soybean stocks figure saw USDA report end of first quarter stocks at 3.736 bbb, near market expectations of 3.743 bb and soaring from last year’s 3.161 bb and establishing a new all-time record. USDA did lower 2018/19 U.S. soybean exports by 25 mb to 1.875 billion, USDA raised 2018/19 soybean crush by 10 mb to 2.090 bb and lowered 2018/19 U.S. soybean ending stocks by 45 mb from December to 910 mb. This is more than double last year’s 438 mb. USDA lowered the Brazilian soybean crop to 117 MMT from 122 MMT previously and 120.8 MMT last year while the Argentine soybean crop was ticked lower to 55.0 MMT from 55.5 MMT previously vs. 37.8 MMT last year.

Strategy and outlook

Producers should look to sell the carry for spring or summer months and use options to re-own and manage risk. Don’t store unpriced crops.

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