×
×
homepage logo

BRIAN HOOPS

By Staff | Sep 27, 2013

COF

The September cattle on feed report is considered bullish for the industry.

The USDA reported that U.S. cattle on feed were down 7 percent from last year.

Cattle and calves on feed for U.S. slaughter for feedlots with capacity of 1,000 or more head totaled 9.9 million head on Sept. 1.

The inventory was 7 percent below Sept. 1, 2012.

Placements in feedlots during August totaled 1.79 million, 11 percent below 2012. Net placements were 1.73 million head.

During August, placements of cattle and calves weighing less than 600 pounds were 405,000, 600-699 pounds were 338,000, 700-799 pounds were 430,000,

and 800 pounds and greater were 615,000.

Placements for the month of August are the lowest since the series began in 1996.

Marketing of fed cattle during August totaled 1.88 million, 4 percent below 2012. Monthly

marketing for August are the second lowest since the series began in 1996.

Other disappearance totaled 55,000 during August, 10 percent below 2012.

This report should be friendly for the market with placements and feedlots well below expectations.

This should be bullish for deferred contracts which should find speculative buying interest.

The deferred contracts have already built in a sizeable premium into futures over the current

cash market, indicating the market is expecting cash trade to rally by the spring. This

should limit the bullishness of the report as feedlots and producers are expected to sell into rallies.

CORN ANALYSIS

Corn closed the week $.08 lower. Last week, private exporters did not report any private export sales.

In the weekly export sales report, corn sales shows sales of 17.2 million bushels for 2013/14. This is above the 14.2 mb needed to stay on pace with the USDA’s projected demand of 1.225 billion bushels.

The weekly crop progress and conditions report U.S. corn condition slipped 1 percent to 53 percent good-to-excellent versus 56 percent average with 4 percent of crop harvested (10 percent is normal) and 22 percent mature versus 41 percent normal. This underscores the need for more frost-free growing weather.

With the USDA confirming larger yield potential compared to August and producers uncovering surprisingly strong yields in early harvesting, the corn market looks to find hedge pressure during the remaining weeks of September and into October.

Reasonable downside targets look to be $4.07 and long term support of $3.87. Producers are opening up fields and finding surprisingly strong yields.

Strategy andf outlook: Producers are 50 percent sold of 2013/14 crop and own the December 560 strike puts on 50 percent of production.

Producers are 10 percent sold of the 2014/15 crop.

SOYBEANS ANALYSIS

Soybeans closed the week $.66 1/4 lower from last week. Private exporters reported a sale of 302,000 metric tons of U.S. soybeans to an unknown destination and 1.93 million metric tons of U.S. soybeans to China.

In the weekly export sales report, soybean sales were 33.9 mb. This is well above the 11 mb needed to reach the USDA demand projection of 11 mb.

The weekly crop progress and conditions report showed soybean rating down another 2 percent to 50 percent g/e versus the 55 percent average.

This is the second-lowest soybean condition of the last 10 years.

Soybean leaf drop is at only 26 percent versuss 35 percent normal.

This suggests that mid-September rains can still be of some benefit to final soy yield.

Areas in the southern U.S. are reporting strong yields, but this is where rain has fallen in the summer months.

In the main soybean belt, where its been dry, yields should be well under average.

Producers must recognize the 70-cent carry that January carries over July and decide not to store soybeans this year.

The price of $12.56 is the 62 percent retracement for November soybeans.

Strategy andf outlook: Producers are 60 percent sold of the 2013/14 crop and own the November 1260 put options on 50 percent of production.

Sell 20 percent of 2013/14 production at $13.95 against January. Producers are 10 percent sold of 2014/15 production.

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

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