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BRIAN HOOPS

By Staff | Oct 14, 2011

CORN ANALYSIS

Corn closed the week $.07 1/2 higher. Last week, private exporters did not announce any private export sales.

Last week, the USDA reported harvest data of the 2011 U.S. growing season with corn harvest at 21 percent complete.

This is below last year’s pace of 37 percent completed and the average of 23 percent. Key growing states show Iowa at 12 percent harvested, Illinois 32 percent harvested, with Indiana at 10 percent, Nebraska 11 percent and Minnesota at 6 percent.

The USDA reported weekly net corn sales of 1.3 million metric tons for the 2011/12 marketing year and 1,800 mt for the 2012/13 marketing year.

Strategy and outlook: Producers should have 30 percent of new crop production sold with $6.60 December puts on 50 percent of the crop. Producers can look to lift these puts and try to rehedge at a higher level.

$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 $.20 3/4 lower from last week. Last week, private exporters announced sales totaling 221,000 mt of U.S. soybeans to China.

Last week, the USDA reported 2011 U.S. soybean harvest was 19 percent completed versus 34 percent last year and the average pace of 25 percent. Key states show Iowa 21 percent harvested, Nebraska 20 percent done, Minnesota 35 percent, Illinois 12 percent and Indiana 5 percent.

The USDA reported weekly net soybean sales of 701,800 mt for the 2011/12 marketing year and 40,000 mt for the 2012/13 marketing year.

Strategy and outlook: Producers should have 30 percent of the 2011 crop production sold and 50 percent covered with November $14.00 puts.

Since soybeans have fallen to major support, producers can look to lift the puts and replace previous sales with call options at the major weekly support level of $11.35. No new sales are advised at this time.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.01 3/4 lower; Kansas City wheat $.19 3/4 lower and Minneapolis wheat $.27 1/4 higher. Last week, exporters did not announce any private sales.

Last week’s crop progress report showed 42 percent of the winter wheat crop has been seeded, behind last year’s pace of 52 percent and the average pace of 53 percent. Oklahoma is 30 percent seeded, Texas is 25 percent finished, Kansas 43% and Nebraska 82 percent finished.

USDA reported net sales of 431,200 mt of wheat for the 2011/12 marketing year, up 1 percent from last week and

down 15 percent from the 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.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.30 lower while feeder cattle ended $1.82 higher. Last week, cash cattle trade was

reported in the North at mostly $190-$191, Steady to $1 higher compared to last week while trade in the South

was $121.00, $1 higher compared with the previous week. USDA reported weekly beef sales of 13,900 mts for

delivery in 2011. Technically, futures rallied above key weekly resistance but was unable to close above this

level. An uptrend line can now be traced on the weekly charts, which if broken, will be very bearish technical

development to the funds.

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 $3.97 lower 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 270.5 pounds versus 270 pounds previous week and 270.7 pounds 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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