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BRIAN HOOPS

By Staff | Apr 22, 2011

CORN ANALYSIS

Corn closed the week $.26 lower. Last week, private exporters reported a private corn sale of 165,000 metric tons to South Korea. Last week, the USDA reported corn planting progress at 3 percent completed nationwide, in line with the average pace and last year’s pace.

Planting in Texas stands at 47 percent completed with virtually no progress reported in the key corn producing states. Even with limited planting progress, it is nearly impossible for corn to rally during planting time.

The weekly export sales report showed net sales of 619,600 MT were down 68 percent from the previous week and 43 percent from the prior four-week average. This year’s net export profile is now at 1.507 billion bushels versus the USDA forecast of 1.950 bb.

Strategy and outlook: Producers are now sold/hedged on 80 percent of the 2010 crop and re-owned 35 percent of sales/hedges with at the money May call options after rolling up March $5.20 calls. Producers should have 30 percent of new crop production sold. Make another old and new crop 10 percent sale at $8.24.

SOYBEANS ANALYSIS

Soybeans closed the week $.60 lower from last week. Last week, private exporters reported a private export sale of 165,000 MT of soybeans to China. NOPA March soybean crush was reported at 134.4 million bushels, slightly higher than expectations of 133.2 mb and compared to February crush of 124.8 mb. However, this was still down 10 percent from last year’s March crush of 149.6 million bushel.

Marketing year-to-date NOPA soybean crush of 975 mb is down 7 percent from last year. Net sales of 114,200 MT for delivery in 2011/2012 were mainly for China (113,500 MT).

This year’s export pace stands at 1.483 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 May call options after rolling up March calls. Producers should have 30 perent of new crop production sold. Make another 10 percnet sale of old and new crop at $15.69.

LIVE CATTLE ANALYSIS

Live cattle ended the week $1.65 lower while feeder cattle ended $2.20 lower. Last week, cash cattle trade was reported in the North at $191, $6 lower compared to last week, while trade in the South was $119, $2 lower compared with the previous week.

Feeder cattle in Oklahoma City sold $3 to $5 higher. The USDA reported beef exports to South Korea in February were reported at 14,554 MT, 9,617 MT or 195 percent higher than the comparable month a year ago. Total U.S beef exports in February were 65,048 MT, or 27 percent higher than a year ago.

Strategy and outlook: Producers were advised to make their first round of 2011 inventory hedges when the market advanced to the $108 major weekly resistance level. Next hedge target was $113 and achieved against the April contract. Target $122 against the June contract for a sale. Producers can look to make hedges in feeder cattle at this time as well. I would recommend 50 percent of inventory to be hedged at this time and remaining risk carried in the cash market. Feed costs should be covered in corn futures/options or cash product through the 2011 growing season.

LEAN HOGS ANALYSIS

Lean hogs closed the week $1.45 higher. Futures are rallying into technical resistance and are struggling to maintain their bullish momentum. The average Iowa-Minnesota hog weight for last week was estimated at 273.7 pounds versus 274.1 lbs previous week and 270.2 lbs last year.

Pork exports in February were higher than a year ago. South Korea accounted for much of the growth in pork exports.

Total shipments of fresh/frozen and processed pork to the Korean market in February were reported to be 16,782 MT, or 181 percent higher than a year ago. Total pork exports for the month were 131,547 MT, or 7 percent higher than a year ago.

The growth in exports to Korea and Japan

offset declines in shipments to Canada, Taiwan, Mexico and other smaller markets. Total pork shipments to Mexico were 29,338 MT, 4 percent lower than a year ago while exports to a host of smaller markets were 19,319 MT, or 20 percent lower than a year ago.

Strategy and outlook: Producers have extended hedges against the June contract to 50 percent coverage at $101.25. Next sales target for June hogs is $105.25 where producers can make another 25 percent hedge.

All feed costs should be locked in as well. Commercial accounts are beginning to sell into this rally while the funds cover short positions but are not in a bearish position yet.

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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