Midwest Marketing Solutions
Tresnor ordered to pay restitution
The U.S. Commodity Futures Trading Commission has issued an order filing and settling charges against Coby Tresner of Andover, Kansas, for failing to register with the CFTC as an associated person and as a commodity trading advisor as required, misappropriating client funds, and making false or misleading statements to the CFTC during its investigation into his misconduct.
The order requires Tresner to pay a $250,000 civil monetary penalty to the CFTC as well as restitution to clients whose funds he misappropriated. The order also permanently bans Tresner from trading on or subject to the rules of any CFTC-registered exchange or other CFTC-registered entity.
In addition, the order permanently prohibits Tresner from entering into any transactions involving commodity interests, on behalf of himself or others, and from applying for registration with the CFTC, among other prohibitions. The order covers Tresner’s conduct during various periods of time between December 2014 and July 2018. The order finds that Tresner solicited and received funds from clients to trade cattle futures on their behalf, but instead of using the funds for trading, Tresner misappropriated the funds and used them to pay personal debts and living expenses. The order also finds that Tresner solicited and accepted orders for futures contracts from customers of a registered introducing broker when he was not registered as required with the CFTC as an associated person of that firm or as a floor broker. The order further states that Tresner acted, and held himself out to the public, as a commodity trading advisor when he was not registered as such with the Commission.
Top-up payment for prevented plant claims
Farmers who filed a prevented plant claim will automatically receive a ‘top-up’ payment. A ten percent plussed up payment will be made to farmers with Yield Protection and Revenue Protection with the Harvest Price Option. Those with Revenue Protection will receive 15 percent.
“This has been such a tremendously tough year for producers and frankly, insurance guarantees aren’t as high as we’d like them based on the low commodity prices,” said Martin Barbre, administrator, Risk Management Agency.
Barbre says the crop insurance companies will begin making the ‘top-up’ payments in mid-October.
“I applaud the companies for stepping up and signing this agreement to bring these important funds to their producers,” he said.
House Agriculture Committee Chairman Collin Peterson praised the USDA announcement, saying it will provide direct help to farmers without additional paperwork.
MGEX has record breaking September
MGEX reported this past month as the best September in history at MGEX with a total exchange volume of 222,077 contracts. This month surpassed the previous record holder, September 2017, by over 50,000 contracts. Additionally, this past month broke into the monthly total exchange volume top-25 record book claiming the 23rd spot.
Corn closed the week $.13 higher. Last week, private exporters announced sales of 120,000 mts of corn to Mexico.
In the weekly export inspections report; U.S. corn exports, for the week ended 9/26/19, were extremely weak at 15.7 million bushels but rebounding modestly from the previous week’s dismal 9.3 million bushels.
Cumulative exports through the first four weeks of the 2019/20 marketing year have reached just 60 million bushels versus 175 million at this time last year, a nearly 66 percent decline. Given the extremely slow start to this year’s export program, even with the USDA’s 2.050 billion bushel export projection being nearly unchanged from 2018/19 exports, the overall shipment pace will likely need to run more than 9 percent stronger than last year’s throughout the October-August time frame as exports are already more than 100 million bushels behind last year’s pace.
In the weekly crop progress and conditions report; U.S. corn conditions were unchanged at 57 percent good/excellent versus 57 percent expected, 57 percent last week and 69 percent last year.
The U.S. corn harvest advanced to 11 percent complete versus 14 percent expected, 7 percent last week, 25 percent last year and 19 percent average. 43 percent of the crop is rated as mature, behind the normal pace of 73 percent.
In the quarterly stocks and small grains report; USDA reported September 1 corn stocks at 2.114 billion bushels, well below the average trade estimate of 2.428 bb and the June 1 stocks estimate of 5.202 billion bushels. This was the largest miss by the trade for the September report in history and led to sharp buying interest by funds that are holding a net short position. Funds are still holding a net short position, which should lead to additional short covering.
Strategy and outlook
Look to sell inventory at resistance and retracement levels.
Soybeans closed the week $.33 higher. Last week, private exporters announced sales totaling 716,000 mts of soybeans to China.
In the weekly export inspections report, U.S. soybean exports last week were decent at 36.1 million bushels and up slightly from the previous week’s 34.0 million bushels).
Soybean exports through the first four weeks of 2019/20 have averaged 32.7 million bushels/week versus 28.1 million/week last year during the same period, with cumulative exports at 116 million bushels versus 109 million a year ago.
Based on the USDA’s 1.775 billion bushel export projection, we estimate soybean shipments will need to average roughly 33.5 million bushels/week throughout October-August versus last year’s 32.5 million/week average from this point forward.
In the weekly crop progress report; U.S. soybean conditions improved 1 percent to 55 percent g/e versus 54 percent expected, 54 percent last week, and 68 percent last year.
U.S. soybean harvest is 7 percent complete versus 6 percent expected, 22 percent last year and 20 percent average. 55 percent of the soybean crop is dropping leaves versus 76 percent normally.
In the Quarter Stocks Report; September 1 soybean stocks were also supportive to prices, coming in at 913 million bushels, well below the average trade estimate of 982 million bushels and the June 1 stocks estimate of 1.790 billion bushels. This was well above last year’s figure of 438 million bushels.
Like with corn, this was the single largest miss by analysts prior to a report for September in history. Part of the reason for the stocks coming in well below estimates was the USDA revision of the 2018 soybean crop to 4.428 billion bushels. This USDA reduced yields by 1.3 bushels per acre to 50.3 bushels per acre and lowered residual use by 24 million bushels. Commercials continue to sell into the rally, adding to net short positions and creating a bearish index reading.
Strategy and outlook
October meetings would be the perfect time for the U.S. and China to reach a trade agreement. If an agreement is reached, look to sell into the ensuing rally.
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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