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BRIAN HOOPS

By Staff | Jul 3, 2009

Each year the market presents producers with marketing opportunities. The best opportunities can always be viewed with 20/20 hindsight and usually occur when no one is expecting them.

Have the best opportunities for marketing your crops come and gone this year? Will the market give you another chance for $10.99 beans and $4.73 corn? If you were fortunate or wise enough to sell soybeans for nearly $11 earlier this marketing year, you have likely sold at the high level for the year.

If you haven’t made a sale yet, recognize that unless a weather-related event threatens the crop, the window for selling soybeans above the $10 price level is closing rapidly.

Normally, the market will provide a marketing opportunity for producers early in the growing season as it attempts to build in a premium to reflect the uncertainty of the growing season.

Next, the market will normally build in a premium during the planting timeframe and finally the next opportunity for the market to build in a weather premium will be during the critical reproductive timeframe.

For corn, this occurs in July during pollination, for soybeans in late July and August during the pod setting stage and for spring wheat the critical reproductive time frame occurs in June and July. Adverse weather during these respective time frames could send prices sharply higher.

However, the window of opportunity for marketing this year’s crops is growing smaller with each passing day. As of June 21, the USDA reported the United States spring wheat crop is 73 percent good to excellent, corn is 70 percent g/e and soybeans are 66 percent g/e.

With good to excellent ratings well above average and the reproductive timeframe for corn and soybeans fast approaching, the markets will need another weather scare this summer for the previous highs to be exceeded.

As I talk with producers each day, many are reluctant to do any new crop pricing or even minimum pricing through put options, citing too high of premiums for the options, limited downside risk, tight stocks or some other reason why they don’t want to take action.

Time is running out for prices to push to new highs. Unless a widespread drought develops in the last half of the growing season, prices are destined to remove weather premium and the window for marketing this year’s crops will be closed permanently.

Don’t get caught wishing you had done a better job of marketing this year, become proactive while the window is still open.

Corn analysis

Corn closed the week $.15 1/4 lower. The weekly export sales report showed net sales of 686,400 metric tons were down 11 percent from the previous week and 3 percent from the prior four-week average.

Increases reported for Japan (373,200 MT, including 125,300 MT switched from unknown destinations and decreases of 110,000 MT), Malaysia (60,000 MT), Egypt (36,200 MT), Colombia (35,700 MT), unknown destinations (29,700 MT), Taiwan (29,400 MT), and Libya (28,000 MT), were partially offset by decreases for Guatemala (9,300 MT).

For the marketing year, the U.S. has now exported 1.696 billion bushels of corn compared to 2.350 bb last year. To reach the USDA’s 1.750 bb forecast, the U.S. needs to export 6.0 million bushels each week.

Planting is all but finished in the U.S. As of June 21, the 2009 crop was rated at 70 percent g/e versus 59 percent a year ago. Iowa was rated 81 percent g/e, Minnesota was rated 80 percent g/e with Nebraska rated 83 percent g/e. Illinois was rated 51 percent g/e and Indiana was rated 62 percent g/e.

Seasonal highs are in for the corn market and the uptrend line on the weekly charts has been broken.

Soybean analysis

Soybeans closed the week $.15 lower. The weekly export sales report showed net sales of 28,000 MT were down 81 percent from the previous week and 62 percent from the prior four-week average.

Increases were reported for Syria (40,000 MT), China (37,100 MT, including 110,000 MT switched from unknown destinations and decreases of 79,000 MT), Japan (29,300 MT, including 28,000 switched from unknown destinations), and Mexico (21,300 MT).

Net sales of 215,400 MT for 2009/10 delivery were primarily for Mexico (67,400 MT), China (58,000 MT), unknown destinations (55,000 MT) and Canada (25,000 MT). For the marketing year, the U.S. has now exported 1.244 bb of soybeans compared to 1.130 bb last year. The U.S. now has to export an average of 0.7 mb each week to meet the USDA forecast of 1.250 bb.

Planting progress is now reaching completion, except for areas in the eastern belt that will double-crop soybeans after harvesting winter wheat. The USDA rated the soybean crop, as of June 21, as 67 percent g/e, 10 percent higher than last year’s crop.

Iowa is rated 78 percent g/e, Minnesota is rated 73 percent g/e, Illinois is rated 52 percent g/e while Indiana is 62 percent g/e. Seasonal highs are in the process of forming and commercials are noted as holding a bearish net short position.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. Midwest Market Solutions is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien.

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