Hog, cattle margins
In the hog markets, farrow-to-finish margins increased last week to $101.44, up from $91.24 the previous week, according to the Sterling Pork Profit Tracker.
At this time last year, the farrow-to- finish margin was $21.26 per head.
Lean hogs climbed more than $6 last week to $127.22, compared to $121.30.
Lean hogs are up nearly $30 from this time last year when they were at $101.49.
Pork Network reports that packer margins declined last week to negative 18 cents compared to $3.87 the previous week.
Last month, pork packers were making $3.22 per head and $9.70 per head at this time last year.
The pork cutout value increased to $129.72 last week, compared to $125.81 the previous week.
Cattle feeding margins exploded the week before the Fourth of July holiday. Feedlot margins hit $280.08 to finish the week ending June 28, compared to $194.24 the previous week, $164.85 last month and negative $162.65 at this time last year, according to the latest data from the Sterling Beef Profit Tracker.
Beef packer margins were also up the week ending June 28, hitting $49.12 per head, compared to $23.60 the previous week.
MGEX announced top five monthly records from June in both total volume and electronic volume. This is the fifth month this year that the Exchange has finished with total volume in the top 25 all-time.
All futures and options contracts traded totaled 214,007, a 70 percent increase from June 2013. Electronic trades totaled 183,434 in June.
Daily electronic volume finished in the top 25 three times this month, occurring on consecutive days from June 18 to June 20.
Daily exchange volume entered the records books on two of those days, as well, peaking at 16,855 on June 20, which was 17th best in Exchange history.
Fiscal year-to-date volume currently stands at 1,678,470, a 55 percent increase over last year at this time.
Two months remain in this fiscal year. Open interest remained high, ending the month at 64,866, a 74 percent increase compared to June 2013.
4th quarter loss
ConAgra Foods Inc. is reporting a loss in its fiscal fourth quarter as write-downs and weak sales weighed on earnings.
ConAgra reported a loss of $324.2 million during the fourth quarter, compared to a profit of $192.2 million a year ago.
Excluding write-downs, restructuring costs and other items, ConAgra’s adjusted earnings fell to 55 cents per share. Revenue fell 2.8 percent to $4.4 billion.
Consumer food sales fell 7.4 percent, while commercial food sales were up 1 percent.
Corn closed the week 31.75 cents lower.
Last week, private exporters announced a sale of 176,000 metric tons of U.S. corn to Egypt for the 2014/15 marketing year.
Weekly export sales of corn showed 12.7 million bushels of old crop sales and 9.1 mb of new crop sales.
In the weekly progress report, corn crop conditions improved to 75 percent good-to-excellent, up 1 percent compared to a week ago and well above last year’s 67 percnet.
The USDA put June 1 corn stocks at 3.854 billion bushels, well above the average trade estimate of 3.7 bb and the largest in four years.
The acreage report put corn acres at 91.6 million acres. The average trade estimate was 91.725 million acres.
Harvested acres did decline to 83.6 million, down from 4.4 percent from the March estimate, a decrease of 500,000 acres.
Ahead of the July 11 WASDE report, Informa estimated the corn crop at 13.73 bb and a yield of 165.3 bushels per acre.
Our key yield development timeframe will occur near the normal timeframe, leaving July 4 through the 20 as our timeframe most sensitive to weather.
Typically, funds exit longs during the third quarter of the year as the market trades lower into harvest, before funds buy into fresh longs in the last quarter of the year in hopes of a post harvest rally.
A threat of extreme heat or dryness could force a short-covering rally, so be quick to change your marketing strategy if adverse weather threatens the Midwest.
Strategy and outlook: Producers are 25 percent sold of the 2014/15 crop and rolled 480 puts to 440 puts on 50 percent of the crop.
They bought out-of-the-money December calls on 25 percent of sales as insurance.
Soybeans closed the week 93.5 cents lower from last week.
Last week, private exporters did not announce any private export sales.
Weekly export sales of soybeans showed 11.7 mb for old crop and 16.8 mb for new crop sales.
In the weekly crop progress report, soybeans conditions remained unchanged from a week ago at 72 percent g/e and are above last year’s 67 percent rating.
This is the highest soybean ratings on record for the last week of June.
In the quarterly stocks and acreage report, soybean acres were a surprisingly large 84.84 million, the highest on record and 8.3 million larger than last year.
Double crop acres are estimated to be lower this year, at only 7 percent of total acreage compared to 10 percent last year.
June 1 soybean stocks came out at 405 mb, 27 mb above the average estimate.
Ahead of the July 11 WASDAE report, Informa estimated the 2014 U.S. soybean crop at a record large 3.7 bb using a yield of 44.5 bpa.
Soybeans are a crop of August, so there is still time for this crop to be harmed due to poor weather. However, weather looks nearly ideal for development at this time, which will keep the pressure against prices.
Strategy and outlook: Producers are 25 percent sold of 2014/15 production. Sell another 10 percent at $12.63 against March 2015.
Producers own November puts on 50 percent of 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. 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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