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BRIAN HOOPS

By Staff | Aug 24, 2012

CORN ANALYSIS

Corn closed the week $.01 1/2 lower. Last week, private exporters did not report any private export sales.

In the weekly export sales report, corn sales were 10 million bushels, but only 4.8 mb slated for 2011/12.

This brings year-to-date sales to 1.559 billion bushels, slightly above the USDA annual forecasts of 1.55 bb.

The weekly crop progress and conditions report showed U.S. corn conditions were unchanged at 23 percent good-to-excellent.

This year’s rating is well below last year’s 60 percent. This year’s crop is rated slightly below the crop of 1988 for mid-August.

Iowa is rated at 16 percent, Nebraska at 31 percent, Minnesota at 53 percent, Illinois is at 5 percent, Indiana at 9 percent and Ohio at 14 percent.

Early yield reports are trickling into the market and these reports suggest yields will be much lower than previously thought.

These early yield reports will continue to be supportive to the market, limiting the downside risk for corn values.

Strategy and outlook: Producers are now 60 percent of 2012/13 crop after making a sale at $8.10 against December.

Producers own the December 740 strike puts on 50 percent of production. Producers are now 20 percent sold of the 2013/14 crop after making a sale at $6.45 December 2013.

SOYBEANS ANALYSIS

Soybeans closed the week $.02 1/4 lower from last week.

Last week private exporters reported a sale of 123,900 metric tons of soybean meal sold to the Philippines.

In the weekly export sales report, soybean sales were 37.5 mb, this puts year-to-date sales at 1.421 bb, above

the current USDA forecast of 1.35 bb.

The weekly crop progress and conditions report showed the soybean crop at 29 percent g/e, unchanged from a week ago.

This is well below last year’s 61 percent rating. Iowa is at 24 percent, Minnesota at 56 percent, Nebraska at 22 percent, Illinois is at 10 percent and Indiana is at 15 percent.

The July NOPA crush of 137.4 mb was the largest of the month of July in five years.

This is up from last month’s 134.2 mb and 12 percent above last year’s July crush of 123 mb.

Traders are reporting a lot of talk the September supply/demand production figure will be larger than the August report figure.

The increase in production estimates should limit the upside potential for soybeans.

Strategy and outlook: Producers are 50 percent sold of the 2012/13 production and producers own the November 1500 put options on 50 percent of the 2012/13 production.

Roll puts to 1600 level and make a 10 percent sale at $16.95.

Producers are sold 10 percent of 2013/14 at $13.30 against November. Make another 10 percent sale at $13.50.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.25 higher while feeder cattle ended $2.47 higher.

Last week, cash trade developed in the South at $121, $1 higher compared with a week ago. In Nebraska, trade developed at $190, $2 higher compared with last week.

Total beef exports continue to lag those of 2011 substantially with the 2012 total of 1.183 billion pounds, falling 11.4 percent short of 2011.

The value of June beef exports, however, was just 0.9 percent than one year ago. That brings YTD beef export value to $2.315 billion, 3.7 percent higher than at the same time last year.

Cattle prices should be poised to test the weekly highs after a technical breakout.

Cash trade outlook should call for higher prices through the rest of the summer and into the fall.

Once prices test the old highs, producers should look to re-establish hedges through the winter months.

Strategy and outlook: Producers currently have no hedges in place.

Feed costs should be covered in corn futures/options or cash product through December.

LEAN HOGS ANALYSIS

Lean hogs closed the week $.67 higher. The average Iowa-Minnesota hog weight for last week was estimated at 265.7 pounds versus 265.5 lbs the previous week and 260.8 lbs last year.

Pork exports remained 12 percent higher, year-to- date, than in 2011.

The 2.746 billion pounds of CWE product exported this year represents 24.1 percent of U.S. commercial pork production, about 11.37 billion pounds), through June.

That percentage, should it hold for the remainder of 2012, would be a record high.

The value of U.S. pork exports in June, at $409.56 million, was 4.3 percent higher than last year and brings the YTD total to $2.758 billion, 12.1 percent higher than in 2011.

Strategy and outlook: Producers currently have no hedges in place.

Sell 50 percent of October at $85.85; 50 percent of December at $84.75; 50 percent of February at $85.85.

Feed costs should be covered in corn futures/options or cash product through December.

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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