Wheat
For the week, Chicago wheat closed $.53 1/4 lower; Kansas City wheat $.67 1/4 lower and Minneapolis wheat $.64 1/4 lower.
Last week, private exporters did not report any private sales. The weekly USDA crop condition report, rated the U.S. winter wheat crop at just 36 percent good/excellent, sharply below last year's early April rating of 65 percent good/excellent. On the bottom end of the scale, 36 percent of the crop is currently rated poor/very poor vs just 6 percent a year ago.
The weekly export sales report showed net sales of 458,800 MT for the 2010/11 marketing year were up 69 percent from the previous week, but down 15 percent from the prior 4-week average. Net sales of 264,100 MT for delivery in 2011/2012 were mainly for Colombia (54,900 MT), unknown destinations (50,000 MT), Indonesia (35,000 MT), and Venezuela (26,000 MT).
This year's exports stand at 1.227 bb vs. the USDA forecast of 1.275 bb.
Strategy & outlook
Producers should be sold/hedged on 100 percent of 2010 crop with hedge to arrive contracts as basis levels will likely to improve during the winter.
Producers should now be 50 percent sold of the 2011 crop after making a sale at the $9.54 level against the Kansas City contract.
We look to make additional sales after the crop has broken dormancy this spring.
Corn
Corn closed the week $.26 lower.
Last week, private exporters reported a private corn sale of 165,000 mts to South Korea.
Last week, the USDA reported corn planting progress at 3 percent completed nationwide, in line with the average pace and last year's pace. Planting in Texas stands at 47 percent completed with virtually no progress reported in the key corn producing states. Even with limited planting progress, it is nearly impossible for corn to rally during planting time.
The weekly export sales report showed net sales of 619,600 MT were down 68 percent from the previous week and 43 percent from the prior 4-week average. Increases were reported for Taiwan (198,400 MT), South Korea (156,000 MT, switched from Japan), Japan (110,500 MT, including 72,800 MT switched from unknown destinations and decreases of 12,500 MT), Syria (62,200 MT, including 60,000 MT switched from Egypt), Indonesia (54,000 MT, switched from unknown destinations), and Mexico (41,600 MT).
Net sales of 189,300 MT for delivery in 2011/2012 were mainly for unknown destinations (62,600 MT), Syria (60,000 MT), and Egypt (40,000 MT). Optional origin sales were reported for South Korea (70,000 MT).\
This year's net export profile is now at 1.507 bb vs. the USDA forecast of 1.950 bb.
Strategy & outlook
Producers and are now sold/hedged on 80 percent of the 2010 crop and re-owned 35 percent of sales/hedges with at the money May call options after rolling up March $5.20 calls.
Producers should have 30 percent of new crop production sold.
Make another old and new crop 10 percent sale at $8.24.
Soybeans
Soybeans closed the week $.60 lower from last week.
Last week, private exporters reported a private export sale of 165,000 mts of soybeans to China.
NOPA March soybean crush was reported at 134.4 million bushels, slightly higher than expectations of 133.2 million bushels and compared to February crush of 124.8 million bushels. However, this was still down 10 percent from last year's March crush of 149.6 million bushel. Marketing year to date NOPA soybean crush of 975 million bushels is down 7 percent from last year.
The weekly export sales report showed net sales of 76,100 MT resulted as increases for Indonesia (98,600 MT, including 65,000 MT switched from unknown destinations and decreases of 5,700 MT), China (78,200 MT), Japan (31,200 MT, including 19,500 MT switched from unknown destinations and decreases of 1,300 MT), and Taiwan (27,500 MT), were partially offset by decreases for unknown destinations (191,000 MT).
Net sales of 114,200 MT for delivery in 2011/2012 were mainly for China (113,500 MT). This year's export pace stands at 1.483 bb vs. the USDA forecast of 1.590 bb.
Strategy & outlook
Producers have sold/hedged 70 percent of the 2010 crop and re-owned 35 percent of sales/hedges with at the money May call options after rolling up March calls.
Producers should have 30 percent of new crop production sold.
Make another 10 percent sale of old and new crop at $15.69.
Live cattle
Live cattle ended the week $1.65 lower while feeder cattle ended $2.20 lower.
Last week, cash cattle trade was reported in the North at $191, $6.00 lower compared to last week while trade in the South was $119.00 , $2 lower compared with the previous week.
Feeder cattle in Oklahoma City sold $3 to $5 higher. The USDA reported beef exports to South Korea in February were reported at 14,554 MT, 9,617 MT or 195 percent higher than the comparable month a year ago. Total U.S. beef exports in February were 65,048 MT 13,26 MT or 27 percent higher than a year ago.
Strategy & outlook
Producers were advised to make their first round of 2011 inventory hedges when the market advanced to the $108 major weekly resistance level. Next hedge target was $113 and achieved against the April contract.
Target $122 against the June contract for a sale. Producers can look to make hedges in feeder cattle at this time as well. I would recommend 50 percent of inventory to be hedged at this time and remaining risk carried in the cash market.
Feed costs should be covered in corn futures/options or cash product through the 2011 growing season.
Lean hogs
Lean hogs closed the week $1.45 higher.
Futures are rallying into technical resistance and are struggling to maintain their bullish momentum. The average Iowa-Minnesota hog weight for last week was estimated at 273.7 lbs versus 274.1 lbs previous week and 270.2 lbs last year.
Pork exports in February were higher than a year ago. South Korea accounted for much of the growth in pork exports. Total shipments of fresh/frozen and processed pork to the Korean market in February were reported to be 16,782 MT, 10,805 MT or 181 percent higher than a year ago.
Total pork exports for the month were 131,547 MT, 8,840 MT or 7 percent higher than a year ago. The growth in exports to Korea and Japan offset declines in shipments to Canada, Taiwan, Mexico and other smaller markets. Total pork shipments to Mexico were 29,338 MT, 4 percent lower than a year ago while exports to a host of smaller markets were 19,319 MT, 4,755 MT or 20 percent lower than a year ago.
Strategy & outlook
Producers have extended hedges against the June contract to 50 percent coverage at $101.25.
Next sales target for June hogs is $105.25 where producers can make another 25 percent hedge.
All feed costs should be locked in as well. Commercial accounts are beginning to sell into this rally while the funds cover short positions but are not in a bearish position yet.
Copyright 2011
Midwest Market Solutions, Inc.
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