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BRIAN HOOPS

By Staff | Aug 26, 2011

CORN ANALYSIS

Corn closed the week $.09 1/4 higher. Last week, private exporters reported 140,000 metric tons of corn sold to Japan.

Last week, the USDA reported 2011 U.S. corn good-to-excellent ratings were 60 percent unchanged from last week. Last year, 69 percent of the crop was rated g/e.

Weekly export sales report showed net sales of 243,500 MT for the 2010/11 marketing year were down 45 percent from the previous week and 35 percent from the prior four-week average. Net sales of 280,300 MT for delivery in 2011/2012, exports of 902,500 MT were down 5 percent.

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 as there appears to be better marketing opportunities ahead. Time is running out for old crop sales. Make another sale at $7.15 to finish the old crop marketing year.

SOYBEANS ANALYSIS

Soybeans closed the week $.32 higher from last week. Last week, private exporters reported no private export sales. The NOPA crush report for July showed crush at 122.95 million bushels, well above the June crush of 117.718 mb, but below the July 2010 crush of 124.18 mb.

The USDA reported soybean g/e ratings last week at 61 percent, unchanged from the previous week and below last year’s rating of 63 percent.

Weekly export sales report showed net sales of 224,400 MT for the 2010/11 marketing year were down 6 percent from the previous week, but up noticeably from the prior four-week average. Net sales of 197,100 MT for delivery in 2011/2012 and exports of 190,700 MT were up 32 percent from the previous week and 12 percent from the prior four-week average.

Strategy and outlook: Producers have sold/hedged 7 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 $13.80 against the September contract.

LIVE CATTLE ANALYSIS

Live cattle ended the week $4.95 lower while feeder cattle ended $3.72 lower. Last week, cash cattle trade was reported in the North at $182, $3 lower compared to last week while trade in the South was $114, $2 lower compared with the previous week. Cattle and calves on feed for U.S. slaughter market, in feedlots with capacity of 1,000 or more head, totaled 10.6 million head on Aug. 1. The inventory was 8 percent above Aug. 1, 2010. This is the third highest Aug. 1 inventory since the series began in 1996.

Placements in feedlots during July totaled 2.15 million, 22 percent above 2010. This is the highest placement total for the month of July since the series began in 1996. Net placements were 2.09 million head. During July, placements of cattle and calves weighing less than 600 pounds were 625,000, 600-699 pounds were 405,000, 700-799 pounds were 498,000 and 800 pounds and greater were 625,000. July fed cattle marketing totaled 1.91 million, slightly above 2010. This is the second lowest for July since the series began in 1996.

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 $1.10 lower. The average Iowa-Minnesota hog weight for last week was estimated at 261 pounds versus 260.8 pounds last week and 265.6 pounds last year.

Monthly pork exports slowed – not to year ago levels, but very close. June shipments were only 2.4 percent higher than last year at 127,100 MT. 2011 is still on pace to be a record year with YTD exports up 14.6 percent. Japan, Mexico and Canada were the three largest destinations for U.S. pork in June. The value of U.S. pork exports was 7.7 percent higher this June than last and year-to-date pork exports are valued at $2.459 billion, over 22 percent higher than last year due to excellent export prices.

Strategy and outlook: Producers should look to extend hedge coverage to 50 percent at $96.50. 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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