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Midwest Marketing Solutions

By Brian Hoops - Columnist | Nov 10, 2020

MGEX has record October

MGEX finished October 2020 as the 11th best month for total monthly volume in history of the Exchange with a total of 268,611 contracts. This past month became the new record for the best October in history, decimating the previous record, October 2007, by 68,163 contracts. Electronic volume came in at 247,068 contracts which makes this past month the 8th best electronic month in history at MGEX. At the close of market, open interest was reported at 79,258 which is 9% higher compared to this time last year.

ADM seeks change of venue

Archer Daniels Midland is seeking a change of venue in a lawsuit that claims it manipulated the spot ethanol market.

Green Plains filed the class action lawsuit in the federal court based in Omaha. ADM wants the case to be consolidated with two similar lawsuits filed in Illinois.

Infinity Futures LLC fined

NFA has ordered Infinity Futures LLC (Infinity Futures), an NFA Member introducing broker located in Chicago, Ill., to pay a $120,000 fine. Infinity Futures is a wholly-owned subsidiary of York Business Associates LLC (York), an NFA Member futures commission merchant located in Deer Park, Ill., and introduces substantially all of its business to York. NFA also ordered Infinity Futures’ associated person (AP) Patrick Zielbauer to pay a $20,000 fine. Finally, NFA ordered Infinity Futures to continue to record all of Zielbauer’s communications for three years.

Corn analysis

Corn closed the week $.08 1/2 higher. Last week, private exporters announced sales of 410,900 mts of corn to an unknown destination and 106,000 mts of grain sorghum to China.

In the weekly export inspections report; U.S. corn exports last week were 28.4 million bushel but were significantly larger than last year’s poor exports this week of 11.2 million bushels. Cumulative export inspections of 270 million bushels continue to run sharply above last year’s 148 million, leaving weekly shipments needing to average roughly 44 million bushels during Nov-Aug to reach the USDA’s 2.325 billion bushel export projection versus last year’s 34.4 million/week average from this point forward.

In the weekly crop progress and conditions report; U.S. corn crop harvest advanced to 82% complete versus 83% expected, 72% last week, 49% last year and 69% average.

In the weekly EIA report; U.S. ethanol production, for the week ended 10/30/20, rose to 961,000 barrels/day (283 million gallons/week) from 941,000 bpd (277 mil gal/week) the week prior, reflecting the highest weekly production in 32 weeks. U.S. ethanol stocks last week held steady at 826 million gallons (19.675 million barrels) versus the previous week’s 823 million gallons (19.601 mil barrels).

Strategy and outlook

The bearish weekly reversal will likely be a signal to the large commodity funds that the trend has ended and values will now work lower. The key will be if there is follow through selling. Producers should have sold product and look to re-own with futures and options.

Soybeans analysis

Soybeans closed the week $.46 3/4 higher. Last week, private exporters announced sales of 132,000 mts of soybeans to China and 272,150 mts of soybeans to an unknown destination. Exporters also announced sales of 30,000 mts of soybean oil to South Korea and 33,000 mts of soybean oil to India. This was the first purchase India has made of U.S. soybean oil since 2012/13.

In the weekly export inspections report; U.S. soybean exports, for the week ended 10/29/20, were 76.5 million bushels but were the lowest in four weeks. Soybean exports continue at an extremely impressive pace with cumulative exports now at 609 million bushels, up 73% from 351 million a year ago. Based on the USDA’s 2.200 billion bushel export projection, soybean exports will need to average roughly 34.9 million bushels/week through the end of the marketing year vs last year’s 28.7 million/week average from this point forward.

In the weekly crop progress and conditions report; U.S. soybean crop harvest moved to 87% complete vs 91% expected, 83% last week, 71% last year and 83% average.

USDA reported September U.S. soybean crush at 171.1 million bushels, right in line with average market expectations of 171.3 million. This reflects a slight decline from 174.7 million in August but solidly above year ago Sept crush of 162.3 million bushels and a new record for the month in exceeding 2018’s 169.6 million bushels. USDA reported end September U.S. soybean oil stocks were 1.849 billion pounds, slightly above average market expectations of 1.826 billion pounds and down modestly from August stocks of 1.942 billion. September stocks, reflecting 2019/20 ending stocks, were solidly above the USDA’s last official old crop ending stocks estimate of 1.740 billion pounds and will add 109 million pounds to the 2020/21 balance sheet from last month’s estimate when USDA releases this month’s WASDE report on Tuesday, November 10.

Strategy and outlook

Producers should have sold into front month contracts as there is no carry and the market is telling you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. Funds are record net long and commercials have a record net short positions, which will ultimately prove bearish but the uptrend remain in tact.

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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