Corn closed the week $.67 3/4 lower. Last week, private exporters did not report any private corn sales. Last week, the USDA reported corn plantings as of Sunday, May 4, have reached only 13 percent complete.
This is only 4 percent more done than the previous week as virtually no progress was made in key states of Illinois, Indiana, Iowa and Ohio. This is the third slowest pace since 1995.
The weekly export sales report showed net sales of 284,200 metric tons were down 19 percent from the previous week and 53 percent from the prior four-week average.
This year’s net export profile is now at 1.603 billion bushels versus the USDA forecast of 1.950 bb.
Strategy and outlook: Producers and 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 closed the week $.66 3/4 lower from last week. Last week, private exporters did not report any private export sales. The USDA did not report any soybean seeding progress.
Exports of 200,200 MT were down 26 percent from the previous week and 58 percent from the prior four-week average. This year’s export pace stands at 1.509 bb versus the USDA forecast of 1.58 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 $3.50 lower while feeder cattle ended $.87 higher. Last week, cash cattle trade was reported in the North at $185, $2 lower compared to last week while trade in the South was $114, $2 lower compared with the previous week.
Feeder cattle in Oklahoma City sold $1 to $3 higher. The weekly beef export sales tallied 17,100 MT for delivery in 2011).
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 $2.90 lower. Futures failed at technical resistance and turned lower, following a softer cash market and following a falling live cattle market. Pork product values are sliding, adding to the idea that futures are overbought. The average Iowa-Minnesota hog weight for last week was estimated at 272.9 pounds versus 272.2 pounds the previous week and 269.9 pounds last year.
According to Successful Farming magazine’s 2010 Pork Powerhouse rankings, Cargill will have roughly 139,000 to 149,000 sows after re-populating the site.
The growth would make Cargill the No. 4 or No. 5 largest U.S. sow owner.
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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