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BRIAN HOOPS

By Staff | Sep 30, 2011

CORN ANALYSIS

Corn closed the week $.53 1/2 lower. Last week, private exports did not announce any private sales.

Last week, the USDA reported the first harvest data of the 2011 U.S. growing season with corn harvest only 10 percent complete. This is below last year’s pace of 18 percent completed and the average of 11 percent. Key growing states show Iowa 3 percent harvested, Illinois 11 percent, with Indiana at 4 percent, Nebraska 2 percent and Minnesota yet to begin.

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 has struggled at the major weekly resistance that proved to be a stopping point earlier this spring and summer. $6.02 is the major weekly support line that should hold on this sell off in the market. If producers have been aggressive sellers and want to re-own, buying on the $6.02 support area should be an excellent opportunity.

SOYBEANS ANALYSIS

Soybeans closed the week $.97 1/2 lower from last week. Last week, private exporters announced a sale of 426,000 metric tons of U.S. soybeans to China.

Last week, the USDA reported 2011 U.S. soybean good-to-excellent ratings were 53 percent, down 3 percent from last week. Last year, 63 percent of the crop was rated g/e. Iowa is rated 62 percent g/e, Illinois 47 percent, Indiana 41 percent, Minnesota 51 percent and Nebraska 79 percent.

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 on the weekly charts has held and forced massive fund liquidation as the funds were buying into the overhead resistance. If prices fall to the $12 support area, look for heavy commercial buying to again develop and support the market from falling below this level.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.47 1/2 lower; Kansas City wheat $.52 3/4 lower and Minneapolis wheat $.05 1/4 lower. Last week, Egypt purchased 240,000 mts of Russian wheat, once again snubbing the U.S.

Last week’s U.S. crop progress report reported 93 percent of the spring wheat crop has been harvested, in line with the average pace of 92 percent. Winter wheat planting progress is estimated at 14 percent completed versus the average pace of 20 percent.

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 $1.67 lower while feeder cattle ended $2.65 lower. Last week, cash cattle trade was reported in the North at mostly $183, $3 to $4 lower compared to last week, while trade in the South was $116 steady compared with the previous week. Cattle and calves on feed for slaughter market in the U.S. for feedlots, with capacity of 1,000 or more head, totaled 10.7 million head on Sept. 1. The inventory was 5 percent above Sept. 1, 2010. This is the third highest Sept 1 inventory since the series began in 1996.

Placements in feedlots during August totaled 2.25 million, 1 percent below 2010. Marketing of fed cattle during August totaled 2.05 million, 7 percent above 2010.

Strategy and outlook: Producers are hedged 50 percent of their third 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 267.2 pounds versus 263.5 pounds the previous week and 268.1 pounds last year.

Total red meat supplies in freezers were up slightly from the previous month and up 11 percent from last year.

Total pounds of beef in freezers were up 3 percent from the previous month and up 11 percent from last year.

Frozen pork supplies were down 3 percent from the previous month but up 13 percent from last year. Stocks of pork bellies were down 49 percent from last month but up 110 percent from 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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