BRIAN HOOPS

By Staff | Jul 8, 2011

CORN ANALYSIS

Corn closed the week $.63 1/4 lower. Last week, private exporters reported 1.37 million mts of corn was sold to two unknown destinations.

Last week, the USDA reported 2011 U.S. corn’s good-to-excellent ratings were 68 percent g/e, down 2 percent from last week. Last year, 75 percent of the crop was at g/e.

Corn planted acres for all purposes in 2011 is estimated at 92.3 million acres, up 5 percent from last year and the second-highest planted acreage in the United States since 1944, behind only the 93.5 million acres planted in 2007.

Growers expect to harvest 84.9 million acres for grain, up 4 percent from last year.

USDA reported June 1 U.S. corn stocks at 3.67 billion bushels, 346 million bushels above market expectations and even sharply above the highest trade estimate of 3.515 billion.

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.

Producers were advised to buy downside protection with put options prior to the June acreage report.

Popular options were the $6.40 December puts.

Commercials have become aggressive buyers on this break, so look for a rally to unfold before marketing any grain.

SOYBEANS ANALYSIS

Soybeans closed the week $.07 1/2 lower from last week, while private exporters announced a sale of 132,000 mts of soybeans to China.

The USDA reported soybean good/excellent ratings last week at 65 percent, down 3 percent from the previous week and compared to last year’s rating of 67 percent.

Soybean planted area for 2011 is estimated at 75.2 million acres, down 3 percent from last year.

Acres for harvest, at 74.3 million acres, is also down 3 percent from 2010.

Record high planted acreage is estimated in New York and North Dakota.

June 1 soybean stocks were also negatively construed, being reported at 619 million bushels, 22 million bushels above market expectations and near the high end of trade estimates of 632 million.

Basis today’s June 1 stocks number, the annual residual usage expectation should be lowered moderately, resulting in an increase in 2010/11 ending stocks expectations.

Strategy and outlook: Producers have sold/hedged 70 percent of the 2010 crop.

Producers should have 30 percent of new crop production sold.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.65 lower while feeder cattle ended $1.87 higher. Last week, cash cattle trade wasreported in the North at $179, steady higher compared to last week, while trade in the South was $112 steady compared with the previous week.

USDA reported that halfway through the year, U.S. beef imports continue to track well below the dismal levels of a year ago and forecasts are for U.S. beef exports to surpass imports by about 412 million pounds.

To put this in perspective consider that in 2011, total U.S. beef disappearance is expected to be 26.03 billion pounds, accoding to the USDA, 1.4 percent, or 358 million pounds less than a year ago.

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 $2.85 lower. 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 268.2 pounds versus 268.3 pounds previous week and 269.7 pounds last year.

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.