NEWS

*The Commodity Futures Trading Commission announced it entered an order requiring Mark Hendershott, located in Wisconsin, to pay a $75,000 civil monetary penalty for acting as an unregistered commodity trading advisor (CTA). The order finds, from in or about May 2018 through at least June 2021, Hendershott violated Section 4m(1) of the Commodity Exchange Act, 7 U.S.C. § 6m(1), by making use of the mails or any means or instrumentality of interstate commerce in connection with his business as a CTA without being registered with the CFTC as required.

According to the order, Hendershott was self-employed as a consultant to farmers. While the majority of his consulting services generally related to activities associated with physical crop-related activities, he also provided his clients hedging advice relating to their crop production using commodity futures. Hendershott provided tailored advice to clients concerning their hedging requirements and counseled clients as to the advisability of using futures contracts to hedge their crop production, including wheat, soybeans, oats, corn, and lean hogs futures.

Hendershott developed his client base by contacting prospective clients, including individuals in the farming community, and he provided this advice in exchange for a flat fee that he charged to his clients.

The order finds in order to facilitate Hendershott’s furnishing of advice with respect to the hedging of his clients’ crop production, Hendershott arranged to have his clients open accounts with a CFTC-registered futures commission merchant, and he assisted in the account opening process for each of the clients he introduced.

In addition, according to the order, he traded on behalf of many of his clients, placing orders in their accounts for futures contracts such as wheat, soybeans, oats, corn, and lean hogs futures. He also engaged in other services for clients, including arranging for transfers to and from his clients’ trading accounts from his clients’ bank accounts and dealing with margin and credit issues within the trading accounts.

Hendershott did not have a power of attorney or other agreement authorizing him to cause transactions to be effected with respect to any of the commodity interest accounts on behalf of which he traded.

The order finds Hendershott was required to register as a CTA because during the relevant period, he held himself out generally to clients and potential clients as a CTA and during the course of the preceding 12 months, he furnished commodity trading advice to more than 15 people, and he used email, the telephone, and the internet in connection with his business as a CTA.

CORN

ANALYSIS

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

In the weekly export inspections report; U.S. corn export inspections, for the week ended Aug. 29, the last full week of the 2023-24 marketing year, were 38 million bushels (mb), little-changed from the previous week’s 36.1 mb but sharply higher than last year’s same-week exports of 19.0 mb, while putting cumulative export inspections at 2.049 billion bushels, up nearly 40% from last year’s 1.467 billion bushels.

Over the last four weeks, corn export inspections averaged 40.1 million bushels/week vs. 20.2 million/week during the same period last year.

In the weekly EIA report, U.S. ethanol production, for the week ended Aug. 30, slipped to 1.061 million barrels/day from 1.071 mbpd the previous week, in line with market expectations but was still a solid 4.8% above last year’s same-week production of 1.012 mbpd.

U.S. ethanol stocks last week dipped to 23.354 million barrels from 23.572 million barrels the previous week and reflecting stocks 8.0% (73 million gallons) higher than year-ago stocks this week of 908 million gallons. Additionally, ethanol stocks are the highest for late August/early September of the last five years and only modestly below record stocks for this week of 1.000 billion gallons in 2019 to be the second highest of available EIA data over the last 15 years.

In the weekly crop progress and conditions report, NASS reported U.S. corn conditions were unchanged at 65% good/excellent vs. 64% expected. 19% of the crop is mature while 60% is in the dent stage and 90% of the crop has reached the dough stage.

STRATEGY & OUTLOOK

Producers have established a floor with put options and put/call spread as well as making 2024 cash sales. One hundred percent protection is advised. Do not lift hedges as harvest lows have not been achieved yet. Look to add 2025 hedges on latest rally.

SOYBEANS

ANALYSIS

Soybeans closed the week $.05 1/2 higher. Last week, private exporters announced sales of 9.4 mb of soybeans to China and a sale of 7.0 mb of soybeans to an unknown destination.

U.S. soybean export inspections last week of 18.3 mb were up modestly from the previous week’s 15.4 mb and last year’s same-week exports of 15.0 mb, putting cumulative export inspections at 1.643 billion bushels, down 14.5% from last year’s 1.921 billion in the last full week of the 2023-24 marketing year.

National U.S. soybean conditions fell 2% to 65% good/excellent vs. 66% expected, 67% last week and 53% last year. 13% of the crop is dropping leaves while 94% is setting pods.

The USDA reported U.S. soybean crush in July was 193.5 million bushels, above average market expectations of 192.1 million bushels, up from 183.7 million bushels in June, 4.7% higher than year-ago July crush of 174.6 million bushels and again easily a new record for the month, as has been the case in nine of the 11 months of the 2023-24 marketing year so far.

With only one month of data remaining for 2023-24, cumulative marketing year-to-date soybean crush of 2.120 billion bushels is up 3.8% from last year’s 2.043 billion, leaving August crush only needing to be 170 million bushels in order to reach the USDA’s 2.290 billion bushel annual crush estimate. USDA reported ending July U.S. soybean oil stocks were 2.009 billion pounds, above average market expectations of 1.968 billion pounds and even slightly above the entire range of market ideas of 1.915-2.000 billion pounds, while slightly slipping from June stocks of 2.125 billion pounds in seasonal fashion but also falling a bit below year-ago July stocks of 2.136 billion pounds. USDA reported 473.5 million bushels of corn were used for ethanol production in July, up solidly from 446.1 million in June, the highest in seven months and notably above year-ago July usage of 455.2 million bushels, putting September-July 2023-24 marketing year-to-date usage at 4.988 billion bushels, up 254 million bushels (5.4%) from last year’s 4.734 billion during same period.

STRATEGY & OUTLOOK

Producers have established a floor with put options and put/call spread as well as making 2024 cash sales. One hundred percent protection is advised. Do not lift hedges as harvest lows have not yet been achieved. Look to add 2025 hedges on the latest rally.

WHEAT

ANALYSIS

For the week, Chicago wheat closed $.15 1/2 higher and Kansas City wheat closed $.10 1/2 higher. Last week, private exporters did not report any U.S. wheat purchases.

U.S. wheat export inspections, in the last full week of the first quarter of the 2024-25 marketing year, were 21.2 mb, up marginally from the previous week’s 20.2 mb and, again, sharply higher than last year’s same-week exports of 11.7 mb as the 2023-24 marketing year got off to a rather slow start. Accordingly, cumulative wheat export inspections of 211 million bushels are now up 32% vs. last year’s 160 million, while the USDA’s 2024-25 export projection of 825 million bushels reflects an expected 16.7% increase in exports vs. last year.

In order to reach the USDA’s export target, wheat exports will need to average roughly 15.1 million bushels/week over the remainder of the marketing year vs. last year’s 13.5 million/week average from this point forward.

In the weekly crop progress and conditions report, spring wheat harvest advanced to 70% complete vs. 69% expected, 51% last week, 68% last year and 70% average. Winter wheat planting is now 2% complete vs. 2% expected, 1% last year and 2% average.

STRATEGY & OUTLOOK

Producers have established a floor with put options and put/call spread as well as making 2024 cash sales. One hundred percent protection is advised.

LIVE & FEEDER CATTLE

ANALYSIS

Last week, live cattle closed $3.37 lower while feeder cattle closed $6.57 lower.

Last week, moderate fed cattle cash trade volumes in the North at $180 to $182 live and $286 to $288 dressed, which is $2 to $4 lower live and $4 to $6 softer dressed compared to last week. Moderate trade in the South at $181 live, which is $1 to $2 lower than last week.

The latest USDA steer carcass weights were steady with last week at 931 pounds, which is 25 pounds above year-ago levels.

The weekly export sales report has net beef sales of 16,500 mts for 2024 with shipments at 14,900 mts.

STRATEGY & OUTLOOK

Producers should have re-established window or fence strategies to protect the downside but allow for upside potential.

LEAN HOGS

ANALYSIS

Lean hogs closed the week $2.60 lower.

Iowa/southern Minnesota weekly hog weights for the week ending Aug. 31 has weights down to 280.7 pounds vs. 282.5 pounds last week and 275.7 pounds last year.

The weekly export sales report has net pork sales of 20,800 mts for 2024 with shipments of 28,000 mts.

STRATEGY & OUTLOOK

Producers should lift hedges as values tested weekly chart support.