Midwest Marketing Solutions
The USDA has distributed $6.8 billion to farmers in Coronavirus Food Assistance Program assistance so far. With four weeks left in the sign up, American Farm Bureau Federation Chief Economist John Newton said at least 50 percent of the first tranche of payments remain.
“There’s definitely a need. I don’t think the $16 billion available in CFAP even begins to make the agriculture industry whole after this demand destruction,” said Newton.
MIH and MGEX announce merger
Miami International Holdings and MGEX Announce Plan of Merger: Miami International Holdings (MIH), the parent holding company of the MIAX Exchange Group, and the Minneapolis Grain Exchange (MGEX), announced that they have entered into a definitive agreement and plan of merger under which MIH has agreed to acquire MGEX for a combination of cash and MIH common stock following a demutualization of MGEX by its members. As a result of the acquisition, MGEX will become a wholly owned subsidiary of MIH. MIH will continue to maintain the trading and clearing operations of MGEX, including its hard red spring wheat contract, while adding new futures products.
NFA sends order
NFA has ordered Connor Paul Campo and James A. Hatzigiannis to not reapply for NFA membership or act as a principal of an NFA Member. Campo and Hatzigiannis were associated persons (AP) of former Chicago, Ill. NFA Member introducing broker Long Leaf Trading Group, Inc. (Long Leaf). The complaint alleged that Campo and Hatzigiannis, while AP’s of Long Leaf, among other things, made misleading sales solicitations to prospective customers that exaggerated profit potential and failed to disclose that over 95% of Long Leaf’s customers lost money.
Corn closed the week $.03 1/4 higher. Last week, private exporters sales of 600,000 mts of corn to China and 130,000 mts of corn to an unknown destination.
In the weekly export inspections report; corn inspections totaled 40.8 mb for the week ending Thursday, August 13, 2020. Total inspections in 2019-20 are now at 1.587 bb, down 13% from the previous year. USDA is estimating corn exports at 1.795 bb in 2019-20, down 13% from the previous year.
In the weekly crop progress and conditions report; U.S. corn crop conditions fell 2% this week to 69% good/excellent versus 68% expected, 71% last week and 56% last year. Iowa saw the largest drop to 59% good/excellent; down 10% on the week. 76% of the crop is in the dough stage with 23% denting.
In the weekly EIA report; ethanol production rose slightly compared to the prior week at 926,000 bpd versus 918,000 bpd last week and 1,023,000 bpd last year. Ethanol inventory rose slightly to 20.3 mb versus 19.8 mb the prior week but still below last year’s 23.4 mb.
Strategy and outlook
Producers should remain hedged, including multiple years of production. Downside risk remains amid increasing production and mounting supplies of corn.
Soybeans closed the week $.05 3/4 higher. Last week, private exporters announced sales totaling 592,000 mts of soybeans to China and 498,000 mts of soybeans to an unknown destination.
In the weekly export inspections report; soybean inspections totaled 28.8 mb. Total inspections in 2019-20 are now at 1.505 bb, down 6% from the previous year. USDA is estimating soybean exports at 1.650 bb in 2019- 20, down 6% from the previous year.
In the weekly crop progress and conditions report; U.S. soybean crop conditions dropped 2% to 72% good/excellent on the week, versus 72% expected, 74% last week and 53% last year. The soybean crop remains one of the highest rated in the last 30 years. Iowa saw a drop of 8% on the week, the largest of any state. 96% is blooming and 84% is setting pods.
The monthly NOPA crush report has crush at a new record for July crush at 172.794 versus estimates of 172.0 mb and well above last month’s 167.3 mb and last year’s 168.1 mb. July bean oil stocks were under estimates at 1.619 billion pounds vs. 1.778 in June but well above last year’s 1.467 bps.
Strategy and outlook
Producers should have sold the latest rally or at a minimum, bought put options to lock in a minimum price level protection. Funds remain long the market due to strong demand trends. Record production looks to cap rallies despite strong exports.
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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