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BRIAN HOOPS

By Staff | Nov 18, 2011

CORN ANALYSIS

Corn closed the week $.17 1/4 lower. Last week, private exporters did not report any private sales.

Last week, the USDA reported harvest data of the 2011 U.S. growing season with corn harvest at 87 percent complete. This is below last year’s pace of 95 percent completed, but ahead of the average of 73 percent.

Key growing states show Iowa 95 percent harvested, Illinois 94 percent, Indiana at 74 percent, Nebraska at 87 percent and Minnesota at 98 percent.

In the monthly supply/demand report, the USDA lowered corn yields to 146.7 bushels per acre versus 148.1 bpa in October, and production at 12.31 billion bushele, compared to 12.433 bb last month.

Ending stocks were lowered and are now estimated at 843 million bushels, down from 866 mb last month. USDA forecast usage at 12.610 bb, 300 mb more than the U.S. produced this year with exports at 1.6 bb.

The report is longer term constructive with ideas the January report will reduce the crop size even further.

Strategy and outlook: Producers should have 30 percent of new crop production sold. Producers lifted 660 December puts on 50 percent of the crop and will try to rehedge at a higher level.

SOYBEANS ANALYSIS

Soybeans closed the week $.45 1/2 lower from last week. Last week, private exporters did not announce any private export sales.

Last week, the USDA reported 2011 U.S. soybean harvest was 92 percent completed versus 98 percent last year and the average pace of 88 percent.

Key states show Iowa 99 percent harvested, Nebraska 100, Minnesota 100 percent, Illinois 97 percent and Indiana 91 percent.

In the monthly supply/demand report, the USDA lowered soybean yields to 41.3 bpa, down from 41.5 bpa in October.

Production was estimated at 3.046 bb, compared to total usage of 3.08 bb. USDA lowered the export forecast to 3.080 bb, thereby raising endings stocks 195 mb.

This is up from 160 mb in October and above the pre-report estimates of 182 mb.

Strategy and outlook: Producers should have 30 percent of the 2011 crop production sold and 50 percent covered with November 1400 puts.

When soybeans fell to major support, producers lifted the puts and will try to rehedge at a higher level.

LIVE CATTLE ANALYSIS

Live cattle ended the week $3.95 lower while feeder cattle ended $1.72 lower.

Last week, cash cattle trade was reported in the North at mostly $200, $7 higher compared to last week, while trade in the South was $124; $5 hgher, compared with the previous week.

The cash market was sharply higher this week, while the futures were sharply lower, a classic signal of a market forging a major top.

Watch the weekly uptrend line closely as fund selling will develop if the trendline is broken.

Strategy and outlook: Producers are hedged 50 percent of all production month. October at $121; December at $122.05; February at $124.65; April at $128.62; June at $126.65 and August at $126.45.

Feed costs should be covered in corn futures and options, or cash product through the 2011 growing season.

LEAN HOGS ANALYSIS

Lean hogs closed the week at $.40 lower. The average Iowa-Minnesota hog weight for last week was estimated at 274.7 pounds versus 273.5 pounds the previous week and 275.9 pounds last year.

Hogs are desperately holding major weekly support, however a violation of this support should result in a major selloff as funds are holding a large, net long position.

Strategy and outlook: Producers have extended hedge coverage to 50 percent in all months of production.

December is hedged at $89.50; February is hedged at $91.90; April is hedged at $94.55; June is hedged at $100.60; July is hedged at $98.92 and August is hedged at $97.00.

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. He can be contacted at 605-660-1155.

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