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BRIAN HOOPS

By Staff | Jun 10, 2011

CORN ANALYSIS

Corn closed the week $.04 1/2 lower. Last week, private exporters did not report any private sales. The USDA reported U.S. corn plantinghas advanced to 86 percent complete.

Iowa seedings are now 99 percent done with Illinois 94 percent done and Indiana only 59 percent complete while Minnesota is 88 percent done and Nebraska 97 percent finished

The first good-to-excellent ratings of the season are 63 percent g/e versus 76 percent rated g/e last year.

In the weekly export sales report, the USDA reported net sales of 471,600 metric tons were down 35 percent from the previous week and 18 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. From a time stand point, producers are advised to buy downside protection with put options prior to the June acreage report.

SOYBEANS ANALYSIS

Soybeans closed the week $.34 3/4 higher from last week. Last week, private exporters did not report any private sales. The USDA reported U.S. soybean seeding progress at 51 percent done, behind the average pace of 71 percent. Iowa is 87 percent done with Illinois 59 percent done, Indiana 25 percent completed, Minnesota 53 done and Nebraska 78 percent.

In the weekly export sales report, the USDA reported net sales of 82,500 MT were down 50 percent from the previous week and 19 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.

LIVE CATTLE ANALYSIS

Live cattle ended the week $1 higher while feeder cattle ended $1.52 higher. Cash cattle trade was reported in the North at $170, $1 lower compared to the previous week, while trade in the South was $104, steady, 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 13,900 MT for delivery in 2011 primarily for Mexico.

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 $1.07 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 was estimated at 270.9 pounds versus 270.8 pounds the previous week and 270.8 pounds last year.

Commercials are becoming very bullish to the hog market, exceeding their bullish positions that ignited a rally that started in November and December of last year. Pork imports by South Korea, the third-biggest buyer of U.S. supplies, soared in the first quarter after the country’s worst foot-and-mouth outbreak cut output, helping meat processors such as Smithfield Foods Inc.

Shipments jumped 85 percent to 81,154 MMT in the first three months, with purchases from the U.S. more than tripling, according to the Korea Meat Trade Association.

The pace may slow in the second half as inventories climb and zero-tariff measures end on June 30, according to an importer group.

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.

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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