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BRIAN HOOPS

By Staff | Oct 7, 2011

CORN ANALYSIS

Corn closed the week $.46 lower. Last week, private exporters announced a sale of 124,000 metric tons of corn sold to South Korea.

Last week, the USDA reported harvest data of the 2011 U.S. growing season with corn harvest at 15 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.

The quarterly stocks report was considered bearish with stocks at 1.128 billion bushels versus pre-report estimates of 942 million bushels.

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 with 6.60 December puts on 50 percent of the crop. Advance sales of the 2011 crop by another 10 percent should March corn reach $8 and roll up puts to at-the-money options.

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.

SOYBEAN ANALYSIS

Soybeans closed the week $.79 lower from last week. Last week, private exporters announced a sale of 105,000 mt of U.S. soybeans to Mexico.

Last week, the USDA reported 2011 U.S. soybean harvest was 5 percent completed.

The quarterly stocks report was neutral to slightly bearish with stocks at 215 mb versus estimates of 224 mb.

Strategy and outlook: Producers have sold/hedged 100 percent of the 2010 crop. Producers should have 30 percent of the 2011 crop production sold and November $14 puts. Producers should advance sales of the 2011 crop by another 10 percent if March futures trade to $15 and roll up the put options to 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.

LIVE CATTLE

Live cattle ended the week $5.32 higher while feeder cattle ended $5.70 higher. Last week, cash cattle trade was reported in the North at mostly $188 to $190, $5 to $7 higher compared to last week; while trade in the South was $11, $3 higher compared with the previous week.

Weekly beef net sales of 12,100 mt for delivery in 2011.

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

Lean hogs closed the week $4.57 higher on a combination of improving product values and reaction to the quarterly hog and pig report.

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.

The quarterly hog and pig report showed U.S. inventory of all hogs and pigs on Sept. 1, was 66.6 million head. This was up 1 percent from Sept. 1, 2010, and up 3 percent from June 1.

Breeding inventory, at 5.81 million head, was up 1 percent from last year, up slightly from the previous quarter. Market hog inventory, at 60.8 million head, was up 1 percent from last year, and up 3 percent from last quarter.

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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