Midwest Marketing Solutions
Sale barn owners charged
The owners of a sale barn in Kansas have been charged with carrying out a check kiting scheme by federal authorities after the fraud resulted in banks losing millions of dollars. Another case involving the livestock market has also tied up sale proceeds for local cattle producers.
On May 30, the Department of Justice announced that the previous day an indictment had been returned by a grand jury in Topeka. The indictment charges Tyler Gillum, 47, and his wife, Camden Gillum, 50, both of Plainville, Kan., with 31 counts of bank fraud and two separate counts of making a false statement. The Gillum’s, who owned Plainville Livestock Commission in Rooks County, had applied for a $1.5 million loan with the Small Business Administration and a $500,000 line of credit with Almena State Bank, both of which were done using false statements. The Gillum’s are alleged to have defrauded Almena State Bank in Almena, Kan., Landmark National Bank in Manhattan, Kan., Colorado East Bank and Trust in Lamar, Colo., Astra Bank in Scandia, Kan., TBK Bank in Dallas, Guaranty State Bank in Beloit and The Bank in Oberlin, Kan.
In the scheme investigators allege that unfunded checks and wire transfers totaling more than $2 billion were sent by Tyler Gillum. From January 2015 to August 2017, a total of 409 wire transfers and 7,584 checks were found through the investigation. Court documents detail that Landmark National Bank incurred a loss at one time of more than $10,000,000. For instance, a list of check transactions shows that five separate checks were deposited to Landmark National Bank on July 21, 2017, totaling $4,717,373.95.
MGEX has second-best May in history
MGEX reported this past month as the second-best May in MGEX history with a total of 172,120 contracts.
Total electronic volume for May concluded at 153,442 contracts. Options volume was recorded at 4,798 contracts, which is a 53 percent increase from April. Open interest was reported at 69,103 contracts at the close of market on May 31, which is 6 percent higher from last month.
Classic Energy LLC fined
NFA has ordered Houston, Texas introducing broker Classic Energy LLC (Classic Energy) to pay a $200,000 fine and has suspended its president, Mathew Webb from NFA membership through January 3, 2022.
The decision, issued by an NFA Hearing Panel, is based on a Complaint issued by NFA’s Business Conduct Committee (BCC), and a settlement offer submitted by Classic Energy and Webb. The hearing panel found that Classic Energy and Webb failed to uphold high standards of commercial honor and just and equitable principles of trade. The hearing panel also found that Classic Energy failed to maintain adequate and complete records and failed to adequately supervise.
Corn closed the week $.11 3/4 lower. Last week, private exporters did not announce any private sales.
Corn inspections totaled 29.3 mb for the week ending Thursday, May 30, below the 45.2 mb needed each week to reach USDA’s export estimate of 2.300 bb.
In the weekly crop progress report, U.S. corn planting 67 percent complete versus 71 percent expected, 58 percent last week, 96 percent last year and 96 percent average.
Roughly 30.3 million acres of corn remains to be planted based on the USDA’s March 29 Prospective Plantings report estimate versus 4.3 million which would have been left to plant based on an average planting pace.
Iowa is 80 percent planted and Minnesota is 76 percent done, but Illinois is only 45 percent complete with Indiana 31 percent, Ohio 33 percent done.
Over 13 million acres remain unplanted in Illinois, Indiana Ohio and Missouri where the 6-10 day is the wettest.
Corn emergence is 46 percent versus the average of 84 percent.
With lots of variables this year, marketing will be very difficult for producers. Expect lower yields and less seeded acres this summer, lowering corn ending stocks. Informa estimated the 2019/20 corn acreage at 84.9 million (USDA in March was at 92.8 million acres) with a yield of 174.0 resulting in total production at 13.6 billion bushels.
Strategy and outlook
With funds now going net long due to adverse weather conditions, producers should use the rally to exit old crop inventories and focus on marketing new crop supplies.
Soybeans closed the week $.23 lower. Last week, private exporters announced a private export sale of 110,000 mts of soybeans to Egypt.
Soybean inspections totaled 18.3 mb, below the 33.6 mb needed weekly to reach USDA’s export estimate of 1.775 bb.
U.S. soybean planting is only 39 percent complete versus 42 percent expected, 29 percent last week, 86 percent last year and 79 percent average.
This is the second slowest soybean pace on record.
An estimated 33.0 million acres of soybeans have been planted so far versus 66.0 million which would have been planted if planting were moving in line with average levels. Roughly 51.6 million acres of soybeans remain to be planted based on the USDA’s March 29 Prospective Plantings report estimate versus 18.6 million which would have been left to plant based on an average planting pace.
Iowa is 41 percent done with Minnesota 51 percent and Nebraska 64 percent complete while Illinois is only 21 percent, Indiana only 17 percent, Ohio 18 percent and Missouri 18 percent.
U.S. soybean crush for the month of April was reported at 171.6 million bushels, above average expectations of 170.0 million bushels (169.0-171.3 million range of ideas), and exactly unchanged from and matching last year’s record April crush of 171.6 million after the previous two months’ crush ran slightly below year ago levels. March crush was 179.4 million bushels. Informa forecast the 2019/20 US soybean crop at 85.037 million acres versus 84.6 million by the USDA in March with a yield of 51.1 bpa and total production at 4.313 billion bushels.
Strategy and outlook
With funds covering shorts due to adverse weather conditions, producers should use the rally to exit old crop inventories and focus on marketing new crop supplies.
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.