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BRIAN HOOPS

By Staff | Sep 23, 2011

CORN ANALYSIS

Corn closed the week $.44 1/2 lower. Last week, the USDA reported 2011 U.S. corn good-to-excellent ratings were 53 percent, up 1 percent from last week. Last year, 68 percent of the crop was rated g/e. Iowa is rated 57 percent g/e, Illinois 40 percent, Indiana 34 percent, Minnesota 63 percent and Nebraska 76 percent.

Corn production is forecast at 12.5 billion bushels, down 3 percent from the August forecast, but up fractionally from 2010. If realized, this will be the third largest production total on record for the United States.

Based on conditions as of Sept. 1, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the August forecast and down 4.7 bushels from 2010. If realized, this will be the lowest average yield in the United States since 2005.

Strategy and outlook: Producers 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 has struggled 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 $.71 1/2 lower from last week. Last week, the USDA reported 2011 U.S. soybean g/e ratings were 56 percent, unchanged from last week. Last year, 63 percent of the crop was rated g/e. Iowa is rated 64 percent g/e, Illinois 44 percent, Indiana 41 percent, Minnesota 62 percent and and Nebraska 82 percent.

Soybean production is forecast at 3.09 billion bushels, up 1 percent from August, but down 7 percent from last year.

Based on Sept. 1 conditions, yields are expected to average 41.8 bushels per acre, up 0.4 bushel from last month, but down 1.7 bushels from last year. Compared with last month, yield forecasts are higher in the Central Great Plains and along much of the Atlantic Coast.

If realized, the forecasted yield in Nebraska will be a record high. Yield forecasts are below last month across the Southern Great Plains and portions of the Southeast as hot, dry conditions persisted during August.

Area for U.S. harvest is forecast at 73.8 million acres, unchanged from August, but down 4 percent from 2010.

Strategy and outlook: 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.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.05 higher, while feeder cattle ended $2.62 higher. Last week, cash cattle trade was reported in the North at mostly $186, $1 lower compared to last week, while trade in the South was $117, $1 lower compared with the previous week.

Strategy and outlook: Producers are hedged 50 percent of their third quarter production at $121 against the October contract.

LEAN HOGS ANALYSIS

Lean hogs closed the week $.10 higher on a combination of improving product values and stronger cash trade.

The average Iowa-Minnesota hog weight for last week was estimated at 267.2 pounds versus 263.5 pounds the previous week and 268.1 pounds last year.

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

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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