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BRIAN HOOPS

By Staff | Jan 28, 2011

On Jan. 21, the USDA released the January Cattle on Feed report, which is considered bearish for the trade with on-feed numbers and placements larger than the average trade guesses.

Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.5 million head on Jan. 1. The inventory was 5 percent above Jan. 1, 2010 and 1 percent larger than expected. The inventory included 7.18 million steers and steer calves, up 4 percent from the previous year.

This group accounted for 62 percent of the total inventory. Heifers and heifer calves accounted for 4.26 million head, up 5 percent from 2010.

Placements in feedlots during December totaled 1.80 million, 16 percent above 2009 and 2.5 percnet larger than expected. Net placements were 1.73 million head.

During December, placements of cattle and calves weighing less than 600 pounds were 480,000, 600-699 pounds were 495,000, 700-799 pounds were 440,000, and 800 pounds and greater were 380,000.

Placements of cattle weighing more than 800 pounds were the largest in history for December while placements in the 700-799 weight class were the second largest in history, only behind December 2004.

Marketings of fed cattle during December totaled 1.83 million, 5 percent above 2009. This is the second-highest fed cattle marketings for the month of December since the series began in 1996.

Other disappearance totaled 65,000 during December, 10 percent below 2009.

COLD STORAGE

Frozen food stocks in refrigerated warehouses on Dec. 31, were greater than year-earlier levels for chicken, eggs, cheese, beef and pork. Total red meat supplies in freezers were up 2 percent from both the previous month and last year.

Frozen pork supplies were up 2 percent from the previous month and up 1 percent from last year. Stocks of pork bellies were up 35 percent from last month but down 10 percent from last year.

Total frozen poultry supplies on Dec. 31, 2010 were up 4 percent from the previous month and up 9 percent from a year ago. Total stocks of chicken were up 4 percent from the previous month and up 25 percent from last year.

Total pounds of turkey in freezers were up 8 percent from last month but down 28 percent from Dec. 31, 2009.

Corn analysis

Corn closed the week $.08 1/2 higher. Last week, private exporters did not report any private sales. The weekly export sales report showed net sales of 904,800 metric tons were up noticeably from the previous week and 50 percent from the prior 4-week average.

This year’s net export profile is now at 1.054 billion bushels versus the USDA forecast of 1.950 bb.

Strategy and outlook: Producers have sold/hedged 70 percent of the 2010 crop and re-owned 35 percent of sales/hedges with at the money March call options. Bought call options when corn hit $5.26 to re-own 2010 cash sales.

Producers should have 20 percent of new crop production sold. Make another old and new crop 10 percent sale at $7.

Soybean analysis

Soybeans closed the week $.10 1/4 lower from last week. Last week, private exporters did not report any private sales. This year’s export pace stands at 1.319 bb versus the USDA forecast of 1.590 bb.

Strategy and outlook: Producers have sold/hedged 70 percent of the 2010 crop and re-owned 35 percent of sales/hedges with at the money March call options.

Producers should have 30 percent of new crop production sold. Make another 10 percent sale of old and new crop at $14.85.

Producers have sold/hedged a portion of the 2010 crop and re-owned cash sales with call options. Don’t become too aggressive with marketing the 2011 crop until more is known about the 2011 marketing year.

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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