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Midwest Marketing Solutions

By Brian Hoops - Columnist | Sep 28, 2020

NFA takes action

NFA has taken an emergency enforcement action against JDN Capital, LLC, an NFA Member commodity trading advisor located in Stuart, Fla., and its sole principal and associated person Joshua David Nicholas. This action was taken to protect customers, the derivatives industry and other NFA Members due to JDN Capital and Nicholas’ failure to cooperate with NFA.

Due to their failure to produce requested documents and information, NFA, among other things, is unable to determine what JDN Capital and Nicholas did with loan proceeds received, including whether Nicholas misappropriated the money to fund his personal trading account. Effective immediately, JDN Capital and Nicholas are suspended from NFA membership and are prohibited from soliciting or accepting any funds from customers or investors for any managed accounts or from lenders, other than financial institutions, without NFA’s prior approval.

Corn analysis

Corn closed the week $.08 3/4 higher. Last week, private exporters sales of 560,000 mts of corn to China; 106,000 mts to Japan and 240,000 mts of corn to an unknown destination.

In the weekly export inspections report; U.S. corn exports last week were 34.6 million bushels. Through 10 days of 2020/21, cumulative export inspections of 45 million bushels compares to 35 million last year. In order to reach the USDA’s 2.325 billion bushel export projection, we estimate corn exports will need to average roughly 42.8 million bushels/week throughout 2020/21 versus last year’s 31.9 million bushels/week average from this point forward.

In the weekly crop progress and conditions report; U.S. corn crop conditions fell 1% to 60% good/excellent versus 61% expected, 61% last week and 55% last year. 41% of the crop is mature, ahead of the average of 32%. U.S. corn harvest advanced to 5% complete versus 5% expected, N/A last week and 3% last year.

The weekly EIA report saw ethanol production fall to 926,000 barrels per day last week, down from 941,000 barrels the previous week and down from 1,003,000 barrel in the same week last year. Ethanol stocks fell to multi-year low of 19.8 million barrels in the week ending September 11, versus 20.0 million the previous week and 23.2 million the previous year.

Strategy and outlook

Corn is following soybeans higher at a time when the growing season has effectively come to an end. As harvest begins, the market is likely to begin to work lower under harvest pressure and the weight of the world supply begins to be felt. The COT report has turned bearish.

Soybeans analysis

Soybeans closed the week $.46 1/4 higher. Last week, private exporters announced sales totaling 984,000 mts of soybeans to China and 820,500 mts of soybeans to an unknown destination. Exporters also announced sales of 100,000 mts of soybean meal cake to an unknown destination.

In the weekly export inspections report; U.S. soybean exports, for the week ended 9/10/20, were 47.2 million bushels in the first full week of the 2020/21 marketing year. Shipments to China last week accounted for 832k tonnes of the total. With the marketing year just getting underway, cumulative export inspections of 68.0 million bushels compare to 45.6 million at this time last year. In order for the USDA’s 2.125 billion bushel export projection to be reached, U.S. soybean exports will need to average roughly 39.3 million bushels/week through the end of August vs last year’s 30.8 million/week average from this point forward.

In the weekly crop progress and conditions report; U.S. soybean crop conditions fell 2% from last week to 63% good/excellent versus 65% expected, 65% last week and 54% last year. 37% of the crop nationally is dropping leaves, slightly ahead of the average of 31%.

The monthly NOPA crush report came in at 165.055 mb, below estimates of 169.5 mb as well as last month’s 172.8 mb and below last year’s 168.1 mb. This was the lowest crush figure since November, 2019. Oil stocks were 1.519 billion pounds vs. estimates of 1.515 although well below estimates of 1.619 bp but above last year’s 1.401 bp.

Strategy and outlook

A record export pace of new crop soybeans has rallied values to 27 month highs. Producers should continue to sell into front month contracts as there is no carry and the market is telling you not to store soybeans. Producers should look to re-own using futures and options.

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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