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BRIAN HOOPS

By Staff | Jul 15, 2011

CORN ANALYSIS

Corn closed the week $.35 1/2 higher. Last week, private exporters reported 120,000 metric tons of corn was sold to Egypt, 235,000 MT to South Korea, 540,000 MT to China and 300,000 MT to an unknown destination

Last week, the USDA reported 2011 U.S. corn good-to-excellent ratings were 69 percent g/e, up 1 percent from last week. Last year, 71 percent of the crop was rated g/e.

USDA reported net sales of 621,800 MT were down 10 percent from the previous week, but up 45 percent from the prior four-week average.

Strategy and outlook: Producers 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, look for a rally to unfold before marketing any grain.

SOYBEANS ANALYSIS

Soybeans closed the week $.34 higher from last week. Last week, private exporters did not announce any private soybean sales. The USDA reported U.S. soybean crop’s good/excellent ratings last week at 66 percent, up 1 percent from the previous week and compared to last year’s rating of 66 percent.

USDA reported net sales of 305,700 MT were down noticeably from the previous week and from the prior 4-week average. Increases were reported for China (372,000 MT), Mexico (31,500 MT), Taiwan (12,900 MT), Indonesia (8,900 MT), and Vietnam (7,800 MT).

Decreases of 2,700 MT were reported for Japan. Optional origin sales of 120,000 MT from China exercised to export from the United States.

Exports of 151,100 MT were down 2 percent from the previous week and 8 percent from the prior four-week average.

Strategy and outlook: Producers have sold/hedged 70 percent of the 2010 crop. Producers should have 30 percent of new crop production sold.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.39 higher; Kansas City wheat $.06 1/2 higher and Minneapolis wheat $.12 1/2 higher. Last week, Egypt purchased 180,000 MT of wheat from Russia and snubbed the U.S.

Exporters did not report any private sales.

Winter wheat harvest is advancing with 56 percent of the crop now harvested, including Kansas, the largest winter wheat-producing state, now at 84 percent harvested.

Spring wheat g/e ratings showed 70 percent of crop in the g/e category, up 1 percent from last week and compared to 80 percent g/e last year.

Strategy and outlook: Commercials have become very bullish to wheat while the public is decidedly bearish. This promises a rally is in store for the wheat market as soon as the technicals turn more bullish.

Producers should now be 50 percent sold of the 2011 crop and are advised to make another 10 percent sale for the 2011 crop at $10.34 against the Kansas City contract.

LIVE CATTLE ANALYSIS

Live cattle ended the week $1.80 higher, while feeder cattle ended $3.12 higher. Last week, cash cattle trade was reported in the North at $179, steady higher compared to last week while trade in the South was $115, $3 higher compared with the previous week.

USDA reported net sales of 13,800 MT for delivery in 2011 were primarily for Mexico (3,700 MT), Canada (3,000 MT), Russia (2,600 MT), South Korea (1,400 MT), and Vietnam (1,200 MT).

Strategy and outlook: Producers are advised to hedge 50 percent of their third quarter production at $128 against the August contract, near the old contract highs. 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 $3.02 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 268.2 pounds versus 268.3 pounds previous week and 269.7 pounds last year.

A run to the old contract highs should find hedging pressure.

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.

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