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BRIAN HOOPS

By Staff | Sep 16, 2011

CORN ANALYSIS

Corn closed the week $.23 1/2 lower. Last week, private exporters announced a 161,900-metric ton sale to South Korea and a 127,500-mt sale to an unknown destination.

Last week, the USDA reported 2011 U.S. corn good-to-excellent ratings were 52 percent, down 2 percent from last week. Last year, 69 percent of the crop was rated g/e. Iowa is rated 55 percent g/e, followed by Illinois at 40 percent, Indiana 34 percent, Minnesota 61 percent and Nebraska 75 percent.

The weekly export sales report showed net sales of 820,600 mt for the 2011/2012 marketing year. Exports of 687,200 mts were reported.

Strategy and outlook: Producers are now sold/hedged on 100 percent of the 2010 crop and should have 30 percent of new crop production sold.

Advance sales of the 2011 crop by another 10 percent should March corn reach $8 and buy at-the-money puts.

Corn is beginning to struggle at the major weekly resistance that proved to be a stopping point earlier this spring and summer. Demand is being hurt by the high price levels and without supply news, or once it has been fully digested, a double top may be charted.

SOYBEANS ANALYSIS

Soybeans closed the week $.19 lower from last week. Last week, private exporters announced a cancelation of 240,000 mt to China.

Last week, the USDA reported 2011 U.S. soybean g/e ratings were 56 percent, down 1 percent from last week. Last year, 64 percent of the crop was rated g/e. Iowa is rated 62 percent g/e, followed by Illinois at 48 percent, Indiana 40 percent, Minnesota 61 percent and Nebraska 79 percent.

Weekly export sales report showed net sales of 444,900 mt for delivery for the 2011/2012 marketing year.

Exports of 239,700 mts were reported.

Strategy and outlook: Producers have sold/hedged 100 percent of the 2010 crop. Producers should have 30 percent of the 2011 crop production sold. Producers should advance sales of the 2011 crop by another 10 percent if March futures trade to $15 and buy at-the-money puts.

A double top is being charted weekly charts as are aggressively selling into this rally. Look for this resistance to hold as harvest cranks up.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.45 3/4 lower; Kansas City wheat $.47 1/2 lower and Minneapolis wheat $.35 1/2 lower. Last week, Egypt purchased 300,000 mt of Russian/Romanian wheat.

Last week’s U.S. crop progress report reported 68 percent of the spring wheat crop has been harvested, behind the average pace of 81 percent and also behind last year’s pace of 74 percent.

Weekly export sales report showed net sales of 512,200 mt for the 2011/12 marketing year were up 39 percent from the previous week and up 25 percent from the prior four-week average.

Exports of 625,100 mt were up 3 percent from the previous week and 6 percent from the prior four week average.

Strategy and outlook: Producers are now 50 percent sold against the 2011 crop. We would advise another 20 percent sale for the 2011 crop at $9.55 against the Kansas City contract against the weekly resistance and buy at-the-money puts.

Wheat may prove to be the leader until the October supply/demand report. Wheat is trading below corn for the first time in history during the corn harvest and if wheat plunges lower, trying to move into the feed rations, it could pull corn lower until the October report.

LIVE CATTLE ANALYSIS

Live cattle ended the week $3.65 higher, while feeder cattle ended $1.90 higher. Last week, cash cattle trade was reported in the North at mostly $187, $7 higher compared to last week while trade in the South was $117 to $118, $4 to $5 higher compared with the previous week.

Weekly beef export sales of 16,500 mt for delivery in 2011 were primarily for Mexico , Japan , Hong Kong , South Korea and Vietnam. Exports of 16,800 mt were mainly to Mexico, Japan , South Korea, Canada and Russia.

Strategy and outlook: Producers are hedged 50 percent of their 3rd quarter production at $121 against the October contract, near the old weekly 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 $1.45 higher on a combination of improving product values and stronger cash trade.

The average Iowa-Minnesota hog weight for last week was estimated at 263.5 pounds versus 263.5 pounds previous week and 266.7 poundss last year.

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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