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BRIAN HOOPS
April 21, 2017

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The euphoria that had lured investors back into commodities is showing signs of fatigue. After

cash poured into exchange-traded funds linked to raw materials earlier this year, in- flows

have plunged in recent weeks. The spigot is turning off even as banks including Gold- man

Sachs Group Inc. urge investors to have "patience" in the wake of a waning price rally.

At stake is more than $400 billion that Citigroup Inc. estimates is invested in com- modity markets

stuck in a tug-of-war between supply and demand. Investors are focused on rising global inventories

for everything from crude oil to soy- beans, while Goldman says the pace of eco- nomic

growth in China will drive raw-materials consumption.

Even commodity hedge funds have been bleeding. Chicago-based Hedge Fund Re- search Inc.'s index tracking funds invested

in commodities dropped 2.3 percent in the six months ended in February, the latest fig- ures show.

That compares with a gain of 3.4 percent for global hedge funds and 4.4 percent for those investing

in equities. The declines have sent money managers packing.

Hedge funds and other large speculators cut their combined net-long position, or the difference between bets on a

price increase and wagers on a decline, across 18 commodities for six straight weeks, U.S. government data show.

They now have a holding of 728,778 futures and options contracts, the lowest in almost a year, figures through March 28 show.

CORN ANALYSIS Corn closed the week 11 cents higher.

Last week, private exporters reported sale of 101,600 mts of corn to an unknown.

Weekly export sales of corn showed a to- tal of 31.0 mb (788,000 mt) with 29.1 mb (738,000) for the 2016-2017

marketing year. This was above the 14.9 mb (378,900 mt) needed this week to be on pace with USDA's April

demand projection of 2.225 bb. The weekly crop progress report showed U.S. corn plantings at 3 percent complete

compared to the trade estimate of 4 per- cent. The 5-year average is at 3 percent complete.

In the weekly EIA report, ethanol pro- duction fell to 1,019k bpd vs. 1,044k bpd the previous week. Ethanol stocks rose to record levels at 23.7 vs.

23.3 the previous week. In the monthly supply/demand report, the USDA reported less than expected U.S. corn

stocks, at corn stocks below estimates at 2.320 bb vs. 2.342 bb, unchanged fromMarch as the USDA left corn

exports unchanged with feed usage cut by 50 mb and ethanol usage in- creased by 50 mb.

World corn stocks were estimated at 223.0 mmts, slightly more than average trade guess and up from 220.7 mts in March.

Midwest U.S. producers will begin to seeding corn acres by mid- April and weather will become very important to

pricing by May. If the month of April is wet and hampers producers planting efforts, look for December corn

to rally in an effort to entice producers to plant corn later, rather than switch acres to soybeans.

Strategy and outlook:

Commercials are bullish and producers should have re-owned previous sales during March ahead of the growing

season.

SOYBEANS ANALYSIS Soybeans closed the week 15 1/2 cents

higher. Last week, private exporters did not report any export sales.

Weekly export sales of soybeans showed a total of 19.4 mb (527,000 mt) with 14.8 mb (402,300 mt) for the

2016-2017 marketing year. Total sales (including outstanding) are now 2.039 bb, above USDA's April demand

projection of 2.025 bb. In the monthly supply/demand report, the USDA raised U.S. soybean stocks to 445 mb

vs. estimates of 447, up 10 mb from March. They chose to not make any changes to the U.S. export forecast.

World soybean stocks were projected at 87.4 mmts, well above the trade guess and up from 82.8 mts in March.

The bearish news appears to have placed a bottom in the soybean market.

In the month of April, the soybean mar- ket has one simple job, to rebound and com- pete again with corn this spring so it does not lose any acres. In

April, soybeans should find support from an effort to return to profitability to encour- age farmers to not switch

from corn to soybeans. Look for soy- beans to maintain their premium to corn to ensure adequate supplies of soybean stocks.

Strategy and outlook:

Maintain re-ownership strategies into the summer months. Beans fell below key sup- port, a great time to increase

re-ownership.

This material has been prepared by a sales or trading employee or agent of Mid- west Market Solutions and is, or is in the na- ture of, a solicitation. This material is not a research report prepared by Midwest Market Solution's Research Department.

Brian Hoops can be reached at (605) 660- 1155.

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