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BRIAN HOOPS

By Staff | Apr 29, 2011

CORN ANALYSIS

Corn closed the week $.04 3/4 lower. Last week, private exporters did not report any private corn sales. Last week, the USDA reported corn planting progress at 7 percent completed nationwide, up from 3 percent last week and the five-year average pace of 8 percent planted.

Last week, December corn posted a new high for the month of April. This has been accomplished six times previously in history and in five of those years, the April highs were exceeded.

The weekly export sales report showed net sales of 613,400 metric tons were down 28 percent from the previous week and 43 percent from the prior four-week average.

This year’s net export profile is now at 1.589 billion bushels versus the USDA forecast of 1.95 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 July call options after rolling up March and May 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 $.48 3/4 higher from last week. Last week, private exporters did not report any private export sales.

The weekly export sales report showed net sales of 349,000 MT were up noticeably from the previous week and from the prior four-week average. This year’s export pace stands at 1.504 bb versus the USDA forecast of 1.580 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 July call options after rolling up March and May calls. Producers should have 30 percent of new crop production sold.

Make another 10 percent sale of old and new crop at $15.69.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.07 lower while feeder cattle ended $.32 lower. Last week, cash cattle trade was reported in the North at $193, $2 higher compared to last week, while trade in the South was $119, steady compared with the previous week.

Feeder cattle in Oklahoma City sold $3 to $5 higher. Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.3 million head on April 1.

The inventory was 5 percent above April 1, 2010. The inventory included 7.12 million steers and steer calves, up 7 percent from the previous year. This group accounted for 63 percent of the total inventory.

Heifers and heifer calves accounted for 4.1 million head, up 2 percent from 2010. Placements in feedlots during March totaled 1.92 million, 3 percent above 2010. Net placements were 1.87 million head.

During March, placements of cattle and calves weighing less than 600 pounds were 380,000, 600-699 pounds were 360,000, 700-799 pounds were 588,000, and 800 pounds and greater were 590,000. Marketings of fed cattle during March totaled 1.99 million, 4 percent above 2010.

This is the second highest fed cattle marketings for the month of March since the series began in 1996.

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 $.37 lower. 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 272.2 pounds versus 273.1 lbs the previous week and 269.3 lbs last year.

Strategy and outlook: Producers have extended hedges against the June contract to 50 percent coverage at $101.25. The 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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