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BRIAN HOOPS

By Staff | Jul 1, 2016

COF

The monthly cattle of feed report showed cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.8 million head on June 1. The inventory was 2 percent above June 1, 2015.

Placements in feedlots during May totaled 1.88 million head, 10 percent above 2015.

Net placements were 1.81 million head. During May, placements of cattle and calves weighing less than 600 pounds were 305,000 head, 600-699 pounds were 250,000 head, 700-799 pounds were 479,000 head, and 800 pounds and greater were 850,000 head.

Marketing fed cattle during May totaled 1.79 million head, 5 percent above 2015.

In cold storage

In the monthly cold storage report, USDA reported total red meat supplies in freezers were down 2 percent from the previous month and down 5 percent from last year.

Total pounds of beef in freezers were down 1 percent from the previous month and down 6 percent from last year.

Frozen pork supplies were down 4 percent from the previous month and down 6 percent from last year.

Stocks of pork bellies were up 7 percent from last month and up 20 percent from last year.

Trader suicide

Sanjay Valvani, a hedge fund manager at Visium Asset Management LP, who was charged last week with insider trading, has been found dead in an apparent suicide, the police

said. Valvani, 44, was discovered by his wife on Monday evening at his Brooklyn home with a wound to his neck, a New York Police Department spokeswoman said.

A suicide note and a knife were recovered, she added. The death marked a stunning turn in one of the U.S. government’s biggest insider trading cases.

Valvani was arrested last Wednesday and charged with fraudulently making $25 million by getting advanced information about U.S. Food and Drug Administration approvals of generic drug applications.

Farm payment forecast: Up

According to USDA’s Economic Research Service, direct farm program payments are forecast to rise by about 31 percent this year, to $13.9 billion. ARC and PLC payments together are expected to account for more than $9 billion this year, about 96 percent of all crop price and revenue -based payments.

The majority of the ARC payments were paid to farms with a history of corn production, while PLC payments were primarily made to farms with a history of rice, peanuts, and canola production.

CORN ANALYSIS

Corn closed the week 53.5 cents lower.

Last week, private exporters reported sales of 138,000 metric tons of corn to South Korea.

Weekly export sales of corn showed a total of 55.9 million bushels (1.42 million metric tons) with 34.3 mb (870,700 mt) for the 2015-2016 marketing year. This was well above the 2.9 mb (73,900 mt) needed to be on pace with USDA’s June demand projection of 1.8 billion bushels.

The weekly crop progress report was bearish for the corn market as conditions were unchanged from the previous week at 75 percent good-to-excellent, while the trade was expecting a reduction of 1 percent to 3 percent. This was also above last year’s 71 percent rating.

The report showed corn ratings the second best in the last 15 years. Looking at the upcoming acreage report, there is little doubt USDA will lower planted acreage, further cutting into the ending stocks and leaving no margin for error this growing season.

This report could be a shocker to the market as some reports have farmers decreasing seeded acres 1 to 3 million from the last report in March.

The quarterly stocks report should be supportive to the market as demand has improved.

Strategy and outlook: Producers should have made cash sales and used options to manage price risk and summer volatility.

SOYBEANS ANALYSIS

Soybeans closed the week 63.5 cents lower.

Last week, private exporters reported sales of 411,000 mt of soybeans to an unknown destination and 258,000 mt of soybeans to China and 40,000 mt of bean oil to China.

Weekly export sales of soybeans showed a total of 48.6 mb (1.32 mmt) with 24.3 mb (660,700 mt) for the 2015-2016 marketing year.

This put total old-crop sales at 1.835 billion bushels, 4 percent above USDA’s June demand projection of 1.76 bb.

U.S. soybean crop conditions fell 1 percent g/e to 73 percent and remains well above last year’s 65 percent g/e rating.

U.S. soybean ratings are the second best in 30 years.

The acreage report at the end of the month could be a shocker to the trade. No doubt producers switched some acres of corn into soybeans, the question to answer is how many?

Trade talk has acreage shifting between 1 million to 3 million acres to soybeans, which will add anywhere from 45 mb to 150 mb of ending stocks to the bottom line.

This could pressure soybeans near previous weekly support of $9 by harvest if ending stocks again approach 460 mb to 500 mb.

The key growing timeframe is just ahead of the market, so soybeans remain a high risk market.

Like the corn market, producers should use options as a risk management tool and price insurance.

Strategy and outlook: Producers should have made cash sales and used options to manage price risk and summer volatility.

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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