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BRIAN HOOPS

By Staff | Oct 19, 2012

CORN ANALYSIS

Corn closed the week $.04 3/4 higher.

Last week, private exporters did not announce any private export sales.

In the weekly export sales report, corn sales shows 0.2 million bushels slated for 2012/13. This is below the 15.4 mb that is needed to stay on pace with the USDA forecasts of 1.15 billion bushels.

The weekly crop progress/conditions report showed U.S. corn harvest is 69 percent done nationally, up 15 percent from last week and ahead of the five-year average of 28 percent.

Normally, 50 percent is the threshold used to determine harvest lows. Iowa is 76 percent done with Nebraska at 67 percent, Minnesota at 78 percent, Illinois at 80 percent and Indiana 49 percent.

USDA pegged U.S. 2012 corn production at an estimated 1.7 bb vs 10.6 bb estimated and 10.72 bb in September with a yield of 122 bushels per acre vs 122.8 bpa last month.

Corn-ending stocks came in at 619 mb vs 733 mb in September.

Strategy and outlook: Producers are now 80 percent sold of 2012/13 crop and producers own the December 740 strike puts on 25 percent of production.

Producers are also 40 percent sold of the 2013/14 crop.

SOYBEANS ANALYSIS

Soybeans closed the week $.29 lower from last week.

Last week private exporters reported a sale of 120,000 metric tons of U.S. soybeans to China.

In the weekly export sales report, soybean sales were 18.4 mb, above the 8.4 mb that is needed to stay on pace with the current USDA forecast of 1.265 bb.

So far in the marketing year, the U.S. is 82 percent sold of the USDA projections.

The weekly crop progress and conditions report showed U.S. soybean harvest is 58 percent done nationally, up 17 percent from last week and ahead of the average of 40 percent. Now that harvest has advanced past the 50 percent mark, traders will be looking for harvest lows, as traditionally the 50 percent threshold indicates when harvest lows form.

Iowa is 80 percent done with Nebraska at 71 percent, Minnesota 95 percent, Illinois aty 47 percent and Indiana at 30 percent.

Conab reported that Brazil is expected to have a record soybean crop next year and estimated production to be at 80 to 83 million metric tons, abour 21 to 25 percent higher than the previous year.

Conab also reported it expects Brazil’s cornproduction next year to be in-line with the previous year’s production of 72 to 73 mmt.

The USDA put U.S. soybean production at 2.86 bb vs 2.77 bb estimated and 2.634 bb in September. Yield is 37.8 bpa vs 35.3 bpa a month ago. Soybean ending stocks were forecast at 130 mb vs 115 mb last month.

Strategy and outlook: Producers are 80 percent sold of the 2012/13 production and producers own the November 1600 put options on 25 percent of the 2012/13 production. Producers are now 40 percent sold of 2013/14.

LIVE CATTLE ANALYSIS

Live cattle ended the week $.70 lower, while feeder cattle ended $1.97 lower.

Last week, cash trade developed in the South at $125, $1 higher compared with a week ago.

In Nebraska, trade developed at $193, $2 higher compared with last week.

Packers were again forced to pay more money for cattle supplies last week as supplies of market-ready cattle are very tight.

Weekly charts indicate resistance is near the $131, another $5 higher than where the current market is.

If the market is able to rally near this resistance level this fall and winter, producers should look to place hedges throughout 2013 marketing year.

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 $1.82 higher.

The average Iowa-Minnesota hog weight for last week was estimated at 271.3 pounds versus 269.2 lbs the previous week and 272.7 lbs last year.

According to a story by Bloomberg News, U.S. hog farmers are slaughtering animals at the fastest pace since 2009 as a surge in feed costs spurred the biggest losses in 14 years. This is expected to lead to smaller herds next year and a rebound in pork prices.

The 73.3 million hogs processed in eight months through August were the most in three years, U.S. Department of Agriculture data show. Pork supply will drop to the lowest per capita since 1975 next year, the USDA estimates.

Cash hog markets are rallying with the cash product gaining 21 percent in the last three weeks. Cutout values have also climbed back to the highest levels since late August.

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