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BRIAN HOOPS

By Staff | Jun 3, 2011

CORN ANALYSIS

Corn closed the week $.77 1/2 higher. Last week, private exporters reported no private corn sales. Last week, the USDA reported U.S. corn plantings as of Sunday, May 22, have advanced to 79 percent complete. Iowa seedings are now 98 percent done with Illinois 90 percent done and Indiana only 49 percent complete while Minnesota is 81percent done and Nebraska 94 percent finished.

In the weekly export sales report, the USDA reported net sales of 726,700 metric tons were down 14 percent from the previous week, but up 52 percent from the prior four-week average.

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 $8.47.

SOYBEANS ANALYSIS

Soybeans closed the week $.50 3/4 higher from last week. Last week, private exporters reported no private soybean sales The USDA reported U.S. soybean seeding progress at 41 percent done, behind the average pace of 51 percent.

Iowa is 78 percent done with Illinois 47 percent done, Indiana 17 percent completed, Minnesota 38 percent done and Nebraska 68 percent.

In the weekly export sales report, the USDA reported net sales of 163,200 MT were down 2 percent from the previous week, but up 68 percent from the prior four-week average

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 32 percent good-to excellent, unchanged from last week with the poor/very poor rating up 1 percent to 45 percent. Kansas is now 15 percent g/e; Oklahoma just 4 percent good and zero percent excellent and Texas is now 9 percent good and zero percent excellent.

Spring wheat seedings are only at 54 percent completed, the slowest since 1985. Last year, 89 percent was seeded at this time and the average is 89 percent.

In the weekly export sales report, the USDA reported net sales reductions of 28,300 MT for the 2010/11 marketing year.

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 $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. In the weekly export sales report, USDA reported beef net sales of 21,100 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 and $113. 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 270.9 pounds versus 270.8 pounds previous week and 270.8 pounds 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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