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BRIAN HOOPS

By Staff | Sep 6, 2013

2014 acres

According to a survey released by Farm Futures magazine, U.S. farmers intend to plant less corn and more soybeans and wheat in 2014.

The survey of more than 1,350 farmers showed U.S. acreage planted to corn could drop to 94.11 million acres in 2014, down 3.4 percent from this year.

Soybean acreage could rise to a record-high 78.75 million acres, up 2 percent from this year’s estimate.

The U.S. Department of Agriculture said farmers planted 97.4 million acres of corn in 2013, the most in 77 years.

U.S. corn acreage has risen 24 percent since 2006. This of course could all change by next spring, depending on what happens with the respective prices of corn, soybeans and wheat, as well as expenses such as cost of seed, fuel and fertilizers.

It cost less to grow a bushel of soybeans than corn, but farmer decisions will likely be made on what crop boasts the largest potential return.

Pork sales

After a poor first quarter, U.S. pork sales increased 20 percent year-over-year in June. Sales are up to both Canada and Mexico.

Becca Hendricks, who specializes in international trade issues for the National Pork Board said, “One great advantage from the Mexico market is they buy a lot of our ham so they’ve really kept the ham value up.

“The hams that typically go to Russia, haven’t been going there, so it’s definitely a good situation for our ham market.”

Hendricks said the export value for every hog sold is equal to nearly $54 per head, which highlights the importance of international sales. The jump in pork sales can be directly related to the large rally this summer in hog values.

Commodities

Commodity prices are down from one year ago, but growers are still investing in new equipment.

According to the Association of Equipment Manufacturers, tractor sales increased 18 percent in July.

Year-to-date, there has been a sales increase of 13 percent. For the month of July, the sale of two-wheel drive and smaller tractors drove the increase.

Sales for four-wheel drive tractors actually declined 18 percent. Combine sales were up two percent for the month.

CORN ANALYSIS

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

In the weekly export sales report, new crop corn sales were 25.9 million bushels.

In the weekly crop progress report, corn conditions were 2 percent lower at 59 percent at good-to-excellent, 23 percent of the crop is dented, behind the average of 45 percent, continuing to indicate the crop is late in maturity.

With the late maturity, the threat of an early frost would be a bullish catalyst to send prices soaring. Corn has only had a minor, late-season rally despite soybeans rallying sharply. Clearly the market is comfortable with the projected supply of corn this season. This rally is uncovering selling interest from producers who have not pre-sold very much of the crop this year and need to make some cash sales prior to harvest. A large carry is being offered, another sign the market is comfortable with available supply.

Producers need to use rallies to sell the carry being offered. If you consider what soybeans and crude oil has done over the last three weeks, you have to be disappointed if you are a corn bull.

Strategy and outlook: Producers are 50 percent sold of the 2013/14 crop. Producers own December corn puts on 50 percent of 2013 production.

Sell 10 percent at $5.30 against July 2014. They sold 10 percent of 2014 production at $5.30 against December 2014.

SOYBEANS ANALYSIS

Soybeans closed the week $.29 1/2 higher from last week. Last week, private exporters announced a sale of 330,000 metric tons of soybeans to China. In the weekly export sales report, new sales were 31.8 mb.

The progress report showed soybean conditions were 4 percent lower at 58 percent g/e. 84 percent of the crop is setting pods. The soybean crop is made during August and has received some timely rains early in the month to help pod fill, but a hot and dry end of August has sent prices soaring as more moisture is needed for the late-seeded crop to reach full yield potential.

Soybean values rallied to the highest chart levels since last September on yield concerns.

An Interesting market setup with January beans commanding a 55-plus-cent premium to July soybeans, gave producers no incentive to store soybeans this year as the market knows a large South American crop will be harvested in late winter. Producers should be using this rally to protect their increased net worth.

Strategy and outlook: Producers are 40 percent sold of 2013/14 and sold 20 percent at $13.50 against the January contract.

Producers own November puts on 50 percent of 2013 production. They sold 10 percent of 2014 production at $12.35 against November 2014.

This material has been prepared by a sales or trading employee or agent of Midwest Market Solutions and is, or is in the nature of, a solicitation. This material is not a research report prepared by Midwest Market Solution’s Research Department. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Midwest Market Solutions believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such.

Brian Hoops can be reached at (605) 660-1155.

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