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Midwest Marketing Solutions

By Staff | Nov 6, 2019

CFTC may revise rules

According to Bloomberg, The Commodity Futures Trading Commission is considering overhauling rules that limit how futures brokers can invest the collateral clients post for trades.

The rules in question were adopted following the 2011 collapse of MF Global Holdings.

MGEX has fifth-best October

MGEX reported the total October volume coming in at 154,584 contracts, making it the fifth-best October in the history of the Exchange.

Electronically, MGEX’s volume reached a total volume of 131,412 contracts traded. Options volume came in at 3,176 contracts, which was six percent higher than October 2018.

Corn analysis

Corn closed the week $.00 3/4 higher. Last week, private exporters did not announce any private sales.

In the weekly crop progress report; U.S. corn conditions are 58 percent good/excellent versus 56 percent expected, up from 56 percent last week.

U.S. corn harvest is only 41 percent complete versus 43 percent expected, 30 percent last week, 61 percent last year and 61 percent average.

Iowa is only 26 percent harvested with North Dakota 6 percent, South Dakota 14 percent, Minnesota 22 percent and Nebraska 44 percent harvested with Illinois 54 percent done, Ohio 48 percent and Missouri 64 percent complete.

U.S. corn exports last week of 15.0 million bushels (mb) were down from the previous week’s 22.8 mb, as well as last year’s 29.1 mb and were the 2nd lowest of the first eight weeks of the 2019/20 marketing year.

Cumulative exports of 137 million bushels are down 60 percent from last year’s 342 million bushels at this time and are the lowest for the first eight weeks into the marketing year on record going back more than 40 years. Even with the USDA’s 1.900 billion bushel export projection reflecting a solid decline from last year’s 2.065 billion bushels, corn exports are estimated to still need to average 36.6 million bushels/week through the end of August to reach this projection.

Yield estimate continue to trend lower and the November supply/demand report will likely show a slightly smaller corn crop compared to a month ago. Farmer selling will slow once 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. Informa estimated U.S. corn crop yield near 168.6 bpa versus USDA 168.4 bpa with a crop size of 13.792 bb versus USDA 13.779 bb estimate.

Strategy and outlook

Look to sell inventory at resistance levels. Even with smaller than expected yields, stocks are large enough with the poor demand pace.

Soybean analysis

Soybeans closed the week unchanged. Last week, private exporters announced sales of 132,000 mts of soybeans to unknown destination and 132,000 mts of soybeans to China for 2019/20. Exporters also announced sales of 135,000 mts of meal to the Philippines.

In the weekly crop progress report, U.S. soybean harvest is now 62 percent complete nationwide versus 62 percent expected, 46 percent last week, 69 percent last year and 78 percent average.

Iowa is 66 percent done, Illinois is 69 percent, Ohio 71 percent, Nebraska 85 percent with Minnesota 62 percent, Missouri 43 percent, South Dakota 58 percent and North Dakota 29 percent complete.

Yield estimate continue to trend lower and the November supply/ demand report will likely show a slightly smaller soybean crop compared to a month ago.

U.S. soybean exports were a marketing year high of 57.6 million bushels and were up from the previous week’s 48.9 mb and last year’s 49.7 mb. Cumulative exports now at 296 million bushels versus 271 million bushels at this time last year.

Soybean exports will need to average roughly 32-33 million bushels/week through the end of August in order for the USDA’s 1.775 billion bushel 2019/20 export projection to be reached. Farmer selling will slow once 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. Informa estimated U.S. soybean yield near 47.0 bpa versus USDA 46.9 bpa and production of 3.553 bb vs USDA 3.550 bb.

Strategy and outlook

The COT report has turned decidedly bearish for the soybean complex with aggressive commercial selling offsetting the strong fund buying.

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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Midwest Marketing Solutions

By Staff | Nov 6, 2019

Non-real estate farm debt declines

After nine consecutive quarters of year-over-year growth, the volume of non-real estate farm debt declined in the third quarter.

In a report from the Federal Reserve Bank of Kansas City, there has been some deterioration in ag credit conditions, but the financial performance at agricultural banks remained sound. Ag lenders report the pace of weak credit conditions has slowed, but the current weather and delayed harvest situation could hurt going into the end of the year.

Corn analysis

Corn closed the week $.02 3/4 lower. Last week, private exporters did not announce any private sales.

In the weekly crop progress/conditions report; U.S. corn conditions were 56 percent good/excellent versus 54 percent expected, 55 percent last week and 68 percent last year.

U.S. corn harvest is only 30 percent complete versus 34 percent expected, 22 percent last week, 48 percent last year and 47 percent average.

U.S. corn exports were only 20.9 million bushels and well below last year’s same-week exports of 40.8 million bushels.

Cumulative exports, through seven weeks of 2019/20, are just 120 million bushels, down 62 percent from last year’s 313 million bushels at this time, with this week’s exports again well below the roughly 36 million bushels/week exports need to average in order to reach the USDA’s 1.900 billion bushel export projection.

Yield estimate continue to trend lower and the November supply/ demand report will likely show a slightly smaller corn crop compared to a month ago. Farmer selling will slow once 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.

Strategy and outlook

Look to sell inventory at resistance levels. Even with smaller than expected yields, stocks are large enough with the poor demand pace.

Soybean analysis

Soybeans closed the week $.11 lower. Last week, private exporters announced sales of 128,000 mts of soybeans to unknown destination and 264,000 mts of soybeans to China for 2019/20.

In the weekly crop progress report, U.S. soybean conditions were unchanged at 54 percent good/excellent versus 53 percent expected, 54 percent last week and 66 percent last year.

U.S. soybean harvest advanced to 46 percent complete versus 42 percent expected (35-50 percent range), 26 percent last week, 51 percent last year and 64 percent average.

U.S. soybean exports were a marketing year high of 47.6 million bushels.

Through the first seven weeks of 2019/20, cumulative exports of 237 million bushels are up a modest 7 percent from last year’s 221 million at this time, while shipments will need to average roughly 33 million bushels/week in order to reach the USDA’s 1.775 billion bushel export projection.

Yield estimate continue to trend lower and the November supply/ demand report will likely show a slightly smaller soybean crop compared to a month ago. Farmer selling will slow once 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.

Strategy and outlook

The COT report has turned decidedly bearish for the soybean complex with aggressive commercial selling offsetting the strong fund buying.

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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