×
×
homepage logo

BRIAN HOOPS

By Staff | Jan 13, 2012

CORN ANALYSIS

Corn closed the week $.03 lower. Last week, private exporters did not announce any private sales.

In the weekly export sales report, corn sales were 13.8 mb versus 17.8 mb needed weekly to hit the USDA forecast.

Dry conditions in Southern Brazil and Argentina are hurting the corn crop and adversely affecting yields.

This should put a price floor underneath corn prices ahead of the USDA report. Informa Economics lowered its estimate of the U.S. 2011 corn yield to 147.0 bushels per acre, from 149.5 previously. The firm cut its estimate of U.S. 2011 corn production to 12.34 billion bushels, from 12.549 billion, previously.

However, Informa’s figures were above USDA’s current 2011 corn yield estimate of 146.7 bpa for a crop of 12.310 billion bushels. Informa cut its estimate of the 2011/12 Argentine corn crop to 24.0 million tonnes, from its December estimate of 27.0 million.

Strategy and outlook: Producers should have 40 percent of 2011/12 crop production sold. Now that the forecasted rally is underway, producers should look to begin making incremental sales on rallies. A rally into resistance of $6.73 should mark the next selling opportunity of 10 percent of the 2011/12 crop year with another 10 percent sale at $6.95.

SOYBEANS ANALYSIS

Soybeans closed the week $.02 lower from last week. Last week, private exporters did not report any export sales.

In the weekly export sales report, soybean sales were 10.3 mb versus 11.8 mb needed to reach the USDA forecast.

Year-to-date sales are 33 percent behind a year ago. Fundamentally, dry weather in South America is providing support as some areas of soybeans have not been seeded in Argentina due to the dry conditions.

It is more likely than not the largest yield estimates from Argentina have already been factored into the market. Informa pegged the U.S. 2011 soybean crop at 3.08 billion bushels, compared with its previous forecast of 3.082 billion and USDA’s current estimate of 3.046 billion. The firm lowered its forecast of Argentina’s 2011/12 soybean crop to 51.0 million tonnes, from 53.0 million previously.

Strategy and outlook: Producers should have 40 percent of the 2011/12 crop production sold. Now that the forecasted rally is underway, producers should look to begin making incremental sales on rallies.

A rally into resistance of $12.74 should mark the next selling opportunity of 10 percent of the 2011/12 crop year with another 10 percent sale at $13.15.

LIVE CATTLE ANALYSIS

Live cattle ended the week $1.12 lower, while feeder cattle ended $3.55 higher. Last week, cash cattle trade was reported in the North at mostly $198, $3 lower compared to last week, while trade in the South was $121, $1 lower compared with the previous week. The futures traded lower last week and cash trade followed the down turn in the futures market.

Weekly charts show futures are testing the top end of the resistance levels, allowing producers another chance at hedging the market.

Strategy and outlook: Producers are hedged 50 percent of all production – 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 July, 2012.

LEAN HOGS ANALYSIS

Lean hogs closed the week $.40 lower. The average Iowa-Minnesota hog weight for last week was estimated at 275.7 pounds versus 275.2 pounds the previous week and 274.3 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 at $98.92 and August is hedged at $97.

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.

Please Enter Your Facebook App ID. Required for FB Comments. Click here for FB Comments Settings page