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BRIAN HOOPS

By Staff | Dec 9, 2011

CORN ANALYSIS

Corn closed the week $.12 3/4 higher. Last week, private exporters did not report any private sales.

One week after indicating corn has reached many technical downside projections and should rebound, corn managed a technical rebound. One reason why corn prices have failed to respond to farmers hopes for a fall rally is the historically slow export pace.

To put into perspective the poor export sales pace of corn, consider this. According to RJOMRT.com, the November export total is 1.05 million metric tons versus 3.91 mmts, which is the five- year average.

The average total U.S. corn export sales over the last 10 years during the month of November has been 144 million bushels, while combined sales over the last month have been just 41 million bushels.

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 $.29 1/4 higher from last week. Last week, private exporters reported no private sales.

Export sales for soybeans remain slow and burdensome so far this marketing year. Year-to-date soybean commitments are now 35 percent behind last year’s pace and indicate a drop of 11.7 percent from the November USDA forecast.

Soybeans broke key support on the daily charts and 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. Current forecasts for South America call for the driest two weeks of weather to date for the main soybean growing regions.

Strategy and outlook: Producers should have 30 percent of the 2011 crop 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.

WHEAT ANALYSIS

For the week, Chicago wheat closed $.51 higher; Kansas City wheat $.38 higher and Minneapolis wheat $.17 1/4 higher. Last week, private exporters did not announce any private sales.

Last week’s crop progress report showed winter wheat conditions were 2 percent improved from last week at 52 percent good-to-excellent, slightly better than last year’s 47 percent g/e rating. Kansas is rated 47 percent g/e while Oklahoma is rated 56 percent, Texas is 25 percent and Nebraska is 74 percent.

Total US wheat sales over the last four weeks have totaled 64 million bushels, well below last year’s strong sales of 117 million bushel.

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 $2.15 higher, while feeder cattle ended $2.45 higher. Last week, cash cattle trade was reported in the north at mostly $203, $1 to $3 higher, compared to last week while trade in the south was $124 to $124.50; steady to $1 higher compared with the previous week.

Strategy and outlook: Producers are hedged 50 percent of all production month. 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/options or cash product through the 2011 growing season.

LEAN HOGS ANALYSIS

Lean hogs closed the week $.92 higher. The average Iowa-Minnesota hog weight for last week was estimated at 275 pounds versus 274.5 pounds the previous week and 275 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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