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BRIAN HOOPS

By Staff | Aug 12, 2011

CORN ANALYSIS

Corn closed the week $.27 1/2 higher. Last week, private exporters did not report any corn sales. The USDA reported 2011 U.S. corn good-to-excellent ratings were 62 percent, unchanged from last week. Last year, 71 percent of the crop was rated g/e.

USDA reported weekly net export sales of 297,400 metric tons resulted as increases for Japan (187,200 MT, including 81,800 MT switched from unknown destinations and decreases of 22,000 MT), China (56,600 MT, switched from unknown destinations), and Mexico (56,100 MT).

Net sales of 461,200 MT for delivery in 2011/2012 were mainly reported for Japan (217,400 MT), Panama (104,900 MT), and Costa Rica (42,200 MT).

Strategy and outlook: Producers are now sold/hedged on 90 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. No new crop sales are advised at this time, until more is known about the crop. Time is running out for old crop sales. Sold 90 percent old crop corn, make another sale at $7.15 to finish the old crop marketing year.

SOYBEANS ANALYSIS

Soybeans closed the week $.26 1/4 lower from last week. Last week, private exporters reported China switched 550,000 MTs of soybeans from the 2010/11 marketing year to 2011/12 marketing year and a sale of 174,000 MTs of beans to China.

The USDA reported soybean g/e ratings last week at 60 percent, down 2 percent from the previous week and below last year’s rating of 66 percent.

USDA reported net sales of 405,600 MT resulted as increases for Mexico (79,100 MT), Taiwan (18,300 MT), and Japan (11,000 MT). Net sales of 1.08 million MT for delivery in 2011/2012 were mainly reported for China (940,000 MT) and unknown destinations (118,000 MT).

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

No new crop sales are advised at this time, until more is known about the crop. Time is running out for old crop sales. Sell 30 percent old crop corn at $14.02 against the September contract.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.06 1/2 higher; Kansas City wheat $.13 1/4 higher and Minneapolis wheat $.03 1/4 lower. Last week, private exporters did not report any private sales. Egypt purchased 240,000 MTs of Russian and Romanian wheat.

Last week’s U.S. crop progress report showed that 81 percent of the winter wheat crop has now been harvested, slightly behind the average of 86 percent.

The USDA also reported 70 percent of the spring wheat crop is rated g/e, down from the previous week’s 74 percent g/e rating. Last year, 82 percent of the crop was rated g/e.

USDA reported net wheat sales of 499,600 MT, for the 2011/12 marketing year, were up 5 percent from the previous week and 14 percent from the prior four-week average.

Increases were primarily for Japan (117,300 MT), Mexico (103,400 MT) and Nigeria (59,800 MT).

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 $8.23 and another 10 percent at $8.56 against the Kansas City contract.

LIVE CATTLE ANALYSIS

Live cattle ended the week $5.97 higher while feeder cattle ended $2.07 lower. Last week, cash cattle trade was reported in the North at $181, $6 lower compared to last week, while trade in the South was $112, $4 higher compared with the previous week.

Weekly beef sales of 17,200 MT for delivery in 2011 were primarily for Mexico (5,200 MT), Canada (2,700 MT), South Korea (2,400 MT), Japan (2,100 MT) and Vietnam (1,400 MT).

Strategy and outlook: Producers are advised to hedge 50 percent of their third quarter production at $126 against the October 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 $10.92 lower.

The average Iowa-Minnesota hog weight for last week was estimated at 260.9 pounds versus 263.7 pounds previous week and 267.0 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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