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BRIAN HOOPS

By Staff | Apr 27, 2012

CORN ANALYSIS

In a very volatile week, corn closed the week $.16 3/4 lower. For the third consecutive week, private exporters did not report any private export sales last week.

In the weekly export sales report, corn sales were 11.8 million bushels versus 16.3 mb needed weekly to hit the USDA forecast of 1.7 billion bushels.

In the weekly crop progress report of the year, corn progress was deemed the fastest ever byApril 22 was 50 percent in 2010 versus the five-year average of 23 percent. Monday’s 17 percent corn plant pace was 2 percent short of the record pace.

It’s important to note that USDA in early-planted 2010, increased U.S. corn yield from February to May by 2.6 bushels, from the initial 164 BPA.

Strategy and outlook: Producers should have 80 percent of 2011/12 crop production sold. New crop sales should begin at $6.05 with a 20 percent sale. Producers own the December 5.40 strike puts on 50 percent of production. If inclined, sell the December 7.00 strike calls to help pay for the cost of the puts.

SOYBEANS ANALYSIS

Soybeans closed the week $.10 higher from last week. Last week, private exporters reported sales of 225,000 metric tons of U.S. soybeans to an unknown destination, 230,000 mt to China.

In the weekly export sales report, soybean sales were at 44.8 mb vs. 5.7 mb needed to reach the USDA forecast of 1.29 bb. NOPA soybean crush of 140.534 mb was less than the estimated 141.5 mb.

Soybeans continued to climb higher, led by continued buying interest by China and active fund buying demand. Very heavy commercial selling is noted in soybeans and meal, which will eventually be bearish for prices. The weekly resistance point looks to be a stopping point for prices this time around and prices should pull back until a weather threat this summer drives prices above the weekly resistance.

Strategy and outlook: Producers are now sold at 100 percent of the 2011/12 crop and are 30 percent sold of the 2012/13 production. Producers bought the November 1360 put options when November rallied to $13.95 on 50 percent of the 2012/13 production.

If inclined, sell the 1600 calls to cheapen the cost of the puts.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.62 lower, while feeder cattle ended $.37 higher. Last week, cash cattle trade was reported in the North at mostly $194, $1 higher compared to last week; while trade in the South was $122, $1 higher compared with the previous week.

In the cattle on feed report, the USDA reported cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1,000 or more head totaled 11.5 million

head on April 1. The inventory was 2 percent above April 1, 2011.

The inventory included 7.17 million steers and steer calves, up 1 percent from the previous year. This group accounted for 62 percent of the total inventory.

Heifers and heifer calves accounted for 4.25 million head, up 4 percent from 2011. Placements in feedlots during March totaled 1.79 million, 6 percent below 2011. Net placements were 1.72 million head.

Marketing of fed cattle during March totaled 1.92 million, 4 percent below 2011.

Strategy and outlook: Producers are hedged 50 percent of all production month. 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. Producers lifted hedges when April fell to the open gap area of $122.

LEAN HOGS ANALYSIS

Lean hogs closed the week $2.62 lower. The average Iowa-Minnesota hog weight for last week was estimated at 276.1 pounds versus 277.3 lbs the previous week and 273.1 lbs last year.

In the monthly cold storage report, the USDA reported total red meat supplies in freezers were up 3 percent from the previous month and up 11 percent from last year. Total pounds of beef in freezers were up 8 percent from the previous month and up 14 percent from last year.

Frozen pork supplies were down 2 percent from the previous month, but up 7 percent from last year. Stocks of pork bellies were up 7 percent from last month and up 26 percent from last year.

Strategy and outlook: Producers have hedge coverage of 50 percent in all months of production. April is hedged at $94.55; June is hedged at $100.60; July is hedged at $98.92 and August is hedged at $97. Producers removed all hedges when April futures hit $83.05.

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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