Corn closed the week $.28 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 93 percent complete.
This is below last year’s pace of 98 percent completed, but ahead of the average of 82 percent. Key growing states show Iowa 98 percent harvested, Illinois 97 percent harvested, with Indiana at 86 percent, Nebraska at 95 percent and Minnesota at 99 percent.
The corn market continues to struggle with wheat prices trading lower than corn and sent a message last week by breaking out of a sideways trading pattern to the downside. Weekly support at $6.02 needs to hold or additional downside weakness will be seen.
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. $6.02 weekly support has provided an excellent opportunity for producers to re-own previous sales with futures and/or options. Hold those positions for now.
Soybeans closed the week $.07 1/4 lower from last week. Last week, private exporters reported private sales totaling 544,500 metric tons of U.S. soybeans to China. The NOPA crush report showed an increase from the previous month at 141.179 million bushels, up 30.886 mb from a month ago.
Last week, the USDA reported 2011 U.S. soybean harvest was 96 percent completed versus 99 percent last year and the average pace of 94 percent. Key states read like this. Iowa 99 percent harvested, Nebraska 100 percent done, Minnesota 100 percent, Illinois 98 percent and Indiana 96 percent.
Soybeans broke key support on the daily charts, despite China buying US soybeans last week as the funds will continue to sell rallies in the market until a fundamental change occurs.
Weather in South America is becoming increasingly important and will be watched closely by traders.
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.
LEAN HOGS ANALYSIS
Lean hogs closed the week $1.02 higher. The average Iowa-Minnesota hog weight for last week was estimated at 274.7 pounds versus 273.5 pounds 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. Look for hog futures to bounce off technical support and test the top end of the trading range.
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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