Corn closed the week $.30 1/4 lower. Last week, private exporters did not report any private sales, while the USDA reported 2011 U.S. corn good-to-excellent ratings were 70 percent g/e, up 1 percent from last week. Last year, 75 percent of the crop was rated g/e.
The USDA reported weekly export net sales of 410,800 MT were up 39 percent from the previous week, but down 9 percent from the prior four-week average.Strategy and outlook: Producers and are now sold/hedged on 80 percent of the 2010 crop and 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 closed the week $.12 3/4 lower from last week. Last week, private exporters announced sales of 301,500 metric of soybeans to China and 120,000 mts soybeans to an unknown destination while cancelling old crop sales of 572,000 mts of sales of old crop soybeans.
The USDA reported U.S. soybean g/e ratings last week at 68 percent, up 1 percent from the previous week and comparable to last year’s rating of 69% percent.
Census May soybean crush was reported at 128 million bushels, in line with market expectations of 127.5 mb and was unchanged from the April crush of 128 mb, but down 4 percent from last year’s 133.0 million.
The crush of 128 mb was the lowest for the month of May in seven years. Marketing year-to-date crush of 1.271 bib is down 7 percent from last year versus the USDA 10/11 estimate reflecting a decline of 6 percent from last year.
Strategy and outlook: Producers have sold/hedged 70 percent of the 2010 crop. 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 $3.30 higher while feeder cattle ended $5.95 higher. Last week, cash cattle trade was reported in the North at $179, $1 higher compared to last week while trade in the South was $112.00, $3 higher compared with the previous week. USDA reported net sales of 23,100 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 $.35 higher. Hog futures continued to rally off of major weekly support.
Commercials are bullish while the funds are caught net short and are covering their shorts. The average Iowa-Minnesota hog weight for last week was estimated at 268.8 pounds versus 270.6 pounds previous week and 271 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.
The quarterly hog and pig report reported U.S. inventory of all hogs and pigs on June 1, was 65 million head. This was up 1 percent from June 1, 2010, and up 2 percent from March 1.
Breeding inventory, at 5.80 million head, was up slightly from last year, and up slightly from the previous quarter. Market hog inventory, at 59.2 million head, was up 1 percent from last year, and up 2 percent from last quarter.
The March-May 2011 pig crop, at 28.9 million head, was up slightly from 2010 but down 1 percent from 2009.
Strategy and outlook: Producers have extended hedges against the June contract to 50 percent coverage at $101.25.
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.