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BRIAN HOOPS

By Staff | Jul 31, 2009

On July 24, the U.S. Department of Agriculture released the July Cattle on Feed Report. The USDA figures coming in near industry expectations. The USDA reported all cattle on feed inventories down 5 percent from a year ago. Cattle on feed supplies totaled 11.6 million head, down 5 percent from the 12.2 million head that were inventoried on July 1, 2008. Cattle on feed in feedlots with 1,000 or more head accounted for 84 percent of the total cattle on feed on July 1, 2009, down slightly from July 1, 2008.

Placements in feedlots during June totaled 1.39 million, 8 percent below 2008. Net placements were 1.33 million head. During June, placements of cattle and calves weighing less than 600 pounds were 315,000, 600-699 pounds were 290,000, 700-799 pounds were 371,000 and 800 pounds and greater were 415,000. This is the second lowest placements for the month of June since the series began in 1996.

Marketing activity of fed cattle during June totaled 1.99 million, 1 percent above 2008. This is the second lowest fed-cattle marketing for the month of June since the series began in 1996.

Other disappearance totaled 57,000 head during June, 5 percent below 2008.

Cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1,000 or more head totaled 9.8 million head on July 1, 2009. The inventory was 5 percent below July 1, 2008. The inventory included 5.99 million steers and steer calves, down 7 percent from the previous year.

This group accounted for 61 percent of the total inventory. Heifers and heifer calves accounted for 3.72 million head, down 3 percent from 2008.

The USDA also reported the monthly cold storage report last week. The USDA reported frozen food stocks in refrigerated warehouses on June 30, were greater than year earlier levels for eggs, pork, cheese, turkey and butter.

Butter stocks were up 5 percent from last month and up 3 percent from a year ago.

Total red meat supplies in freezers were up 1 percent from the previous month and up 6 percent from last year.

Frozen pork supplies were down 1 percent from the previous month but up 9 percent from last year. Stocks of pork bellies were down 3 percent from last month but up 3 percent from last year.

Total frozen poultry supplies on June 30 were up 2 percent from the previous month, but down 5 percent from a year ago. Total stocks of chicken were up 3 percent from the previous month, but down 14 percent from last year. Total pounds of turkey in freezers were up 2 percent from last month and up 6 percent from June 30, 2008.

Corn analysis

Corn closed the week $.06 lower. The weekly export sales report showed net sales of 757,600 metric tons were up 8 percent from the previous week, but down 8 percent from the prior four-week average. Increases reported for Japan (460,000 MT, including 78,200 MT switched from unknown destinations and decreases of 11,700 MT), South Korea (145,400 MT), Mexico (48,000 MT), Canada (45,300 MT), Colombia (44,600 MT, including 12,500 MT switched from unknown destinations), Tunisia (20,000 MT) and El Salvador (18,100 MT).

For the marketing year, the U.S. has now exported 1.828 billion bushels of corn compared to 2.403 bb last year. The U.S. has reached the USDA forecast of 1.8 bb.

As of July 19, the 2009 crop was rated at 71 percene good-to-excellent versus 65 percent a year ago. This is the second highest crop rating in the last nine years and the third best in the last 15 years.

Iowa was rated 80 percent g/e, Minnesota was rated 78 percent g/e, Nebraska rated 82 percent g/e, Illinois was rated 60 percent g/e and Indiana was rated 65 percent g/e.

No doubt the corn crop will be large. It’s just a matter of how large of a crop it will be. A yield above 160 bushels per acre, could put projected ending stocks over 2 billion bushels.

Soybean analysis

Soybeans closed the week $.11 1/2 higher. The weekly export sales report showed net sales of 320,000 MT were up noticeably from the previous week and 99 percent from the prior four-week average. Increases reported for China (157,600 MT, including decreases of 110,400 MT), Mexico (115,300 MT), Japan (21,800 MT, including 18,900 MT switched from unknown destinations), Taiwan (19,200 MT), and Indonesia (14,000 MT), were partially offset by decreases for unknown destinations (20,000 MT), Guatemala (5,000 MT), and Turkey (2,100 MT).

For the marketing year, the U.S. has now exported 1.278 bb of soybeans compared to 1.138 bb last year. The U.S. now has reached the USDA forecast of 1.260 bb.

The USDA rated the soybean crop, as of July 19, at 67 percent g/e, 6 percent higher compared to last year’s crop rating of 61 percent. This is the second highest rated soybean crop in the last nine years. Iowa is rated 78 percent g/e, Minnesota is rated 71 percent g/e, Illinois is rated 57 percent g/e while Indiana is 63 percent g/e.

The key pod-setting stage is still in front of the market, leaving the door open for a dry month of August to rally prices substantially. However a wet month of August will send prices towards weekly long-term support.

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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