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BRIAN HOOPS

By Staff | Jan 31, 2014

The USDA’s cattle of feed report, issued on Jan. 24, was deemed as negative as cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.6 million head on Jan.1, 5 percent below Jan. 1, 2013.

The inventory included 6.78 million steers and steer calves, down 4 percent from the previous year, accounting for 64 percent of the total inventory.

Heifers and heifer calves accounted for 3.73 million head, down 8 percent from 2013.

Placements in feedlots during December 2013 totaled 1.68 million, 1 percent above 2012.

Net placements were 1.6 million head. During December, placements of cattle and calves weighing less than 600 pounds were 485,000, 600-699 pounds were 420,000, 700-

799 pounds were 391,000, and 800 pounds and greater were 385,000.

Marketing of fed cattle during December 2013 totaled 1.74 million, 1 percent below 2012.

In the monthly cold storage report, the USDA reported total red meat supplies in freezers were up slightly from the previous month, but down 2 percent from last year.

Total pounds of beef in freezers were down 3 percent from the previous month and down 6 percent from last year.

Frozen pork supplies were up 2 percent from the previous month and up 1 percent from last year.

Stocks of pork bellies were up 67 percent from last month and up 124 percent from last year.

CORN ANALYSIS

Last week, corn closed the week 4.5 cents higher. Last week, private exporters reported corn sales of 205,664 metric tons of corn to Japan, as well as sales of 150,000 mt to Spain and 120,000 mt to Egypt.

Weekly export sales of corn showed a total of 27.3 million bushels, above the 11 mb needed each week to reach the USDA forecast.

Total annual exports total of 1.185 billion bushels represent 80 percent of the USDA’s export of 1.45 bb.

With supply now finalized and indications of improved demand, the January supply/demand report should mark the low for prices and a shift in sentiment even though the supplies remain ample.

We can expect the market to find some short covering and try to rally, especially if traders unwind corn-soybean spreads.

Corn has been entrenched in a downtrend and looks to remain in an overall negative chart pattern with the fundamentals decidedly bearish.

Funds meanwhile should look to buy back some short positions ahead of the planting and growing season, allowing corn to have some short-lived rallies.

Many producers are nervous about the upcoming growing season, wanting to get some hedges in place.

Patience this year should provide selling opportunities.

Strategy and outlook: Producers are 100 percent sold of 2013/14 crop. Producers are 10 percent sold of the 2014/15 crop.

SOYBEANS ANALYSIS

Soybeans closed the week 31.75 cents lower from last week.

Last week, private exporters announced a sale of 126,000 mt of soybeans to China.

Weekly export sales of soybeans showed a total of 25.85 mb. Exports should improve next week with strong private sales reflected in the total.

Total export sales of 1.549 bb exceed the USDA forecast of 1.495 bb.

The weekly charts show soybeans have rallied to the weekly downtrend line, which should provide stout resistance.

However, if dry weather continues in South America, this resistance will be broken and prices should explode higher.

The USDA is forecasting old crop ending stocks at a tight 150 mb, assuming China is going to eventually cancel U.S. purchases and shift demand to South America.

If the South American crop is threatened due to drought, China will not be able to meet their needs with South American soybeans and remain buyers of U.S. soybeans.

This will give producers some golden marketing opportunities for both old and new crop soybeans.

Strategy and outlook: Producers are 100 percent sold of the 2013/14 crop.

Producers are 10 percent sold of 2014/15 production. Sell 10 percent at $12.10.

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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