×
×
homepage logo

BRIAN HOOPS

By Staff | Aug 26, 2010

All U.S./Canada cattle inventories

All cattle and calves in the U.S. and Canada combined totaled 114.8 million head on July 1, down 2 percent from a year ago. All cows and heifers that have calved, at 46.1 million head, were down 2 percent from a year ago.

All U.S. cattle and calves, as of July 1, totaled 100.8 million head, 1 percent below the 102.0 million head on July 1, 2009. All cows and heifers that have calved, at 40.8 million head, were down 1 percent from a year ago.

All cattle and calves in Canada, as of July 1, totaled 14.0 million head, down 5 percent from the 14.7 million on July 1, 2009. All cows and heifers that have calved, at 5.34 million, were down 4 percent from the 5.57 million on July 1, 2009.

Cold storage report

Frozen food stocks in refrigerated warehouses on July 31, were greater than year earlier levels for eggs and cheese.

Total red meat supplies in freezers were down 1 percent from the previous month and down 20 percent from last year. These include:

  • Frozen pork supplies were down 5 percent from the previous month and down 28 percent from last year. Stocks of pork bellies were down 38 percent from last month and down 64 percent from last year.
  • Total frozen poultry supplies on July 31, were up slightly from the previous month but down 11 percent from a year ago.
  • Total stocks of chicken were up 1 percent from the previous month, but down 1 percent from last year.
  • Total pounds of turkey in freezers were down 1 percent from last month and down 22 percent from July 31, 2009.

Cattle on feed

U.S. cattle and calves on feed for slaughter market, for feedlots with capacity of 1,000 or more head, totaled 9.9 million head on Aug. 1. The inventory was 2 percent above Aug. 1, 2009.

Placements in feedlots during July totaled 1.75 million, 6 percent below 2009. Net placements were 1.71 million head. Also, placements of cattle and calves weighing:

  • Less than 600 pounds, 415,000.
  • 600-699 pounds, 305,000.
  • 700-799 pounds, 449,000.
  • 800 pounds and up, 585,000.

Marketing of fed cattle during July totaled 1.90 million, 2 percent below 2009. This is the lowest number for fed cattle marketing for the month of July since the series began in 1996.

Other disappearance totaled 48,000 during July, 12 percent above 2009.

Bottom line

The placement and marketing figures are slightly below the trade estimates and will be considered slightly negative for the trade. This report is not a trend changer for the market, but the slightly larger inventory levels and poor marketing will indicate to the trade that supplies may not be quite as tight as previously expected.

Corn analysis

Corn closed the week $.09 1/2 higher. Last week’s crop progress report showed national good-to-excellent ratings were 69 percent, 2 percent lower compared to a week ago. Iowa is rated 68 percent g/e, Nebraska 83 percent g/e, Minnesota 90 percent g/e, Illinois 63 percent g/e and Indiana at 60 percent g/e. 11 percent of the crop is rated either poor or very poor.

Last year’s ratings were 68 percent g/e and 10 percent p/vp. The weekly export sales report showed net sales of 594,900 metric tons for delivery in 2009/10 were up 35 percent from the previous week and 22 percent from the prior four-week average. Net sales of 2,293,700 MT for delivery in 2010/11.

Cumulative old and new crop weekly corn export sales reached 2.89 MT, the third highest amount since 1990. This time, cumulative corn sales fell just short of the 16-year-old record set in December 1994 of 3.28 MT.

This year’s export profile is now at 2.065 billion bushels versus the USDA forecast of 1.975 bb.

Strategy and outlook: Hedgers have sold/hedged a portion of the 2010 crop when December futures traded above $4.50 and between $3.80 and $4. Producers should have also bought new crop put option protection and should use additional market strength to roll put options to a higher price level.

Making 2011 sales above $4.50 may be a great marketing plan.

Soybean analysis

Soybeans closed the week $.34 1/4 lower from last week. NOPA July soybean crush was reported at 124.2 million bushels, in line with the average trade estimate of 124.2 mb, and compared to June crush of 126.2 mb. It was larger than 2009 crush of 120.9 mb.

The range of ideas for July crush was 121.2 to 127.5 mb. While crush was exactly as expected, end-of-July soybean oil stocks among NOPA members were reported at 3.03 billion pounds, significantly above market expectations of 2.93 billion pounds.

Actual soybean oil stocks are slightly below last month’s 3.04 billion pounds and significantly higher than last year’s 2.80 billion.

The USDA reported crop ratings of 66 percent g/e, unchanged compared to last week. Iowa is rated 69 percent g/e, Illinois at 64 percent g/e, Indiana 64 percent g/e, Minnesota 88 percent g/e and Nebraska at 79 percent g/e. 11 percent of the crop is rated poor to very poor.

Last year, 66 percent of the crop was rated g/e and 9 percent was rated p/vp.

This year’s export profile remains well ahead of last year’s record pace at 1.51 bb versus the USDA forecast of 1.47 bb.

Strategy and outlook: Producers have sold/hedged the 2010 crop when November futures traded above $10.30, $9.87 and $9.60. Producers should have purchased new crop put option protection and can use additional price strength to roll up those put options to better protection levels.

Making 2011 sales above $10.30 is a great marketing plan.

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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page