×
×
homepage logo

BRIAN HOOPS

By Staff | May 27, 2011

CORN ANALYSIS

Corn closed the week $.77 1/2 higher. Last week, private exporters reported a corn sale of 125,000 metric tons of corn to South Korea. Last week, the USDA reported U.S. corn plantings, as of Sunday, May 16, have advanced to 63 percent complete.

Iowa seedings are now 92 percent done with Illinois 69 percent done with Indiana only 29 percent complete, while Minnesota is 47 percent done and Nebraska 84 percent finished.

December corn found good support around $6.20 to $6.30, which represents the lows for the month of April and the key 50-day moving average.

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 $8.47.

SOYBEANS ANALYSIS

Soybeans closed the week $.50 3/4 higher from last week. Last week, private exporters reported a sale of 110,000 MT of soybeans to China.

The USDA reported U.S. soybean seeding progress at 22 percent done, behind the average pace of 31 percent. Iowa is 47 percent done with Illinois 16 percent done, Indiana 6 percent completed, Minnesota 9 percent done and Nebraska 40 percent.

NOPA April soybean crush was reported at 121.3 million bushels, sharply below market expectations of 125.5 mb, and down from March crush of 134.4 mb and last year’s 131.7 mb. The range of market ideas was 124 to 128 mb.

April soybean oil stocks among NOPA members were reported at 2.694 billion pounds, also sharply below initial market expectations of 2.9 to 3 billion pounds and down sharply from last month’s 3.06 billion and last year’s 2.812 billion.

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 $15.07.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.78 3/4 higher; Kansas City wheat $.63 3/4 higher and Minneapolis wheat $.99 3/4 higher. Last week, private exporters did not report any private sales.

In the weekly USDA crop condition report, the U.S. winter wheat crop was rated at only 33 percent good-to-excellent, down 1 percent from last week; while the poor to very poor rating went up a point to 42 percent. Kansas is now 18 percent g/e; Oklahoma just 4 percent good and zero percent excellent, and Texas is now 8 percent good and zero percent excellent.

Strategy and outlook: Producers should be sold/hedged on 100 percent of 2010 crop with hedge-to-arrive contracts as basis levels will likely improve during the winter. Producers should now be 50 percent sold of the 2011 crop after making a sale at the $9.54 level against the Kansas City contract. Make a 10 percent sale for the 2011 crop at $10.34 against the Kansas City contract.

LIVE CATTLE ANALYSIS

Live cattle ended the week at $4.02 lower while feeder cattle ended $6.70 lower. Last week, cash cattle trade was reported in the North at $175, $6 lower compared to last week, while trade in the South was $108.00, $4 lower compared with the previous week.

Feeder cattle in Oklahoma City sold $1 to $3 lower. Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.2 million head on May 1.

The inventory was 7 percent above May 1, 2010. Placements in feedlots during April totaled 1.8 million, 10 percent above 2010. This is the second highest placements for the month of April since the series began in 1996. Net placements were 1.74 million head.

During April, placements of cattle and calves weighing less than 600 pounds were 450,000, 600-699 pounds were 310,000, 700-799 pounds were 490,000, and 800 pounds and greater were 545,000.

Marketing of fed cattle during April totaled 1.81 million, 3 percent below 2010.

Strategy and outlook: Producers were advised to make their first round of 2011 inventory hedges when the market advanced to the $108 and $113. A target of $122 was nearly achieved against the June contract. Producers were also advised to make hedges in feeder cattle at that time as well. 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 $2.57 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 270.8 pounds versus 271.7 pounds the previous week and 270.3 pounds last year.

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.

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