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Midwest Marketing Solutions

By Staff | Feb 8, 2020

CFTC settles charges against Catalyst Capital Advisors LLC, of Huntington, New York, and its CEO

The Commodity Futures Trading Commission today issued an order filing and simultaneously settling charges against Catalyst Capital Advisors LLC, of Huntington, New York, and its CEO, Jerry Szilagyi, for materially misleading statements made by Catalyst and one of its portfolio managers, and for failing to implement an adequate supervisory system to prevent such misstatements.

Separately, the CFTC charged the portfolio manager, Edward Walczak, of Madison, Wisconsin, with fraud in a complaint filed in the U.S. District Court for the Western District of Wisconsin. The order requires Catalyst, a registered commodity pool operator, to pay a $1.3 million civil monetary penalty and $8,908,481 in disgorgement (including pre-judgment interest). The order also requires Szilagyi to pay a $300,000 civil monetary penalty. Catalyst and Szilagyi are ordered to cease and desist from further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

Federal crop insurance premiums due

According to RMA; farmers who received a prevented planting top-up payment last fall must purchase federal crop insurance for the next two crop years. USDA’s Risk Management Agency is advising farmers to pay their premiums on time so they don’t become ineligible to buy crop insurance. Friday is the deadline to pay that crop insurance premium.

U.S. corn and soybean planting estimates

IEG Vantage, formerly known as Informa Economics, is predicting U.S. corn planting will top 93 million acres this year. Soybean acres are forecast to be up more than 10 million acres from last year at 86.5 million. Informa is also forecasting a record Brazilian soybean crop, at 126 million metric tons.

Corn analysis

Corn closed the week $.04 3/4 lower. Last week, private exporters announced sale of 111,252 mts of corn to Japan for 2020/21; 124,355 mts of corn to Mexico for 2019/20 and 134,000 mts of optional origin corn to South Korea.

In the weekly export inspections report; U.S. corn exports last week were 26.3 million bushels, (mb) but still solidly below last year’s 38.1 mb and the average “needed” pace of 40.0 mb – a level still not achieved a single time through 21 weeks of the 2019/20 marketing year.

Cumulative exports of 400 mb are down a massive 53 percent from last year’s 850 million, leaving exports needing to average roughly 40 million bushels/week through the end of August in order to reach the USDA’s 1.775 billion bushel export projection.

In the weekly EIA report; U.S. ethanol production, for the week ended 01/24/20, fell to a 12-week low of 1.029 million barrels/day (303 million gallons/week) from 1.049 mbpd (308 mil gal/week) the week prior. U.S. ethanol stocks continue to rise, bumping up to 1.018 billion gallons (24.244 million barrels) from 1.009 bil gallons (24.031 mil barrels) the previous week, the highest in 26 weeks and sixth highest weekly stocks ever since EIA began reporting weekly data in June 2010.

Demand is improving for corn and should continue to improve into the end of February until South American supplies become available. Increased number of animals on feed should improve feed demand this quarter.

Strategy and outlook

The bullish weekly reversal should limit the fund and speculative selling interest. The sluggish fundamentals will limit the upside potential and producers should sell inventory on rallies.

Soybeans analysis

Soybeans closed the week $.29 1/2 lower. Last week, private exporters announced sale of 30,000 mts of bean oil to Egypt.

In the weekly export inspections report; U.S. soybean exports, for the week ended 1/23/20, were 38.2 million bushels and the 2nd lowest exports of the last 15 weeks. Cumulative exports of 927 million bushels remain up a solid 23.1 percent from last year’s 753 million at this time, leaving exports needing to average roughly 25.2 million bushels/week through the end of August in order to reach the USDA’s 1.775 billion bushel export projection. Normally, February looks to see slower U.S. export sales as early planted beans in Northern Brazil begin to come to harvest and hit the world market at a price lower than any U.S. posted price. Because Brazil can only store up to 25 percent of their harvest, they are forced to forward sell approximately 75 percent of their early harvested soybeans. It is the period between mid-February and May that South America over takes the U.S. as the primary port of origin for beans. This will leave weather on late maturing crops as the sole bullish factor for soybean values. February in Brazil and Argentina is like August here as it’s a key yield-developing month for three quarters of the crop.

Strategy and outlook

Futures are anticipating that South America will produce a record soybean crop this will surely cut into U.S. exports and limit the upside potential for soybean values. Futures look to probe key support in February unless South American weather turns adverse.

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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