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USDA Reports Held Surprises For Markets

Wheat: For the week, Chicago wheat closed $.03 3/4 lower; Kansas City wheat $.01 higher and Minneapolis wheat $.05 1/4 higher. Last week, exporters did not report any private sales.
In the weekly export sales report, all wheat sales were strong at 18.0 mb, well above the 13.7 needed each week to reach the USDA annual forecast of 1.100 mb. Total commitments of wheat are the largest since 1990 and are 47 percent of the total USDA annual forecast.
In the crop progress report, spring wheat conditions were 2 percent lower at 66 percent g/e. Spring wheat harvest is only 6 percent completed compared to 24 percent over the last five years.
Kansas City and Minneapolis wheat has respected technical support, while Chicago has fallen below weekly support. The market will continue to struggle from mounting world supplies with strong demand offsetting hedging interests.

Strategy & outlook
Kansas City producers are 100 percent sold of the 2012/13 production and 50 percent sold of 2013/14 production. Minneapolis wheat producers are 100 percent sold of 2012/13 production and 50 percent sold of 2013/14 production.

Corn
Corn closed the week $.10 1/4 higher and posted a bullish weekly reversal. Last week, private exporters sold 252,155 mts of U.S. corn to Mexico.
In the weekly export sales report, new crop corn sales were 36.7 mb.
In the weekly crop progress report, corn conditions were unchanged at 64 percent good/excellent. Silking is pegged at 94 percent and corn in the dough stage is estimated at 32 percent (48 percent 5 yr average). The crop continues to be late in maturity and with the late maturity, the threat of an early frost would be a bullish catalyst to send prices soaring.
Additionally, demand late season dryness will cut yield potential as the crop will need moisture to fill ears.
The worst case scenario for prices looks to be weekly support of $3.87. Rallies will find selling interest from producers who have not pre-sold very much of the crop this year and need to make some cash sales prior to harvest.

Strategy & outlook
Producers are now 100 percent sold of 2012/13 crop and are also 50 percent sold of the 2013/14 crop.
Producers own December corn puts on 50 percent of 2013 production. We will look to buy at the money calls if weather turns adverse.

Soybeans
Soybeans closed the week $.77 higher from last week. Last week, private exporters reported sales of 1,107,000 mts of U.S. soybeans to China and 266,000 mts of U.S. soybeans to an unknown destination.
In the weekly export sales report, new sales were excellent at 69.9 mb. With the large private sales last week, the weekly export sales report should be bullish.
The crop progress report showed soybean conditions unchanged at 64 percent good/excellent. 88 percent (92 percent last year) are blooming and 58 percent (68 percent last year) are setting pods, both behind the five-year averages.
The soybean crop is made during August and has received some timely rains this month to help pod fill, but a dry rest of the month will send prices higher as more moisture is needed for the late seeded crop to reach full yield potential.
NOPA reported July U.S. soybean crush by its members at 116.3 million bushels, down from 119.1 million last month, and down 15 percent from last year’s July crush of 137.4 million. This was the lowest crush for the month of July since 2004. South American hedge pressure will increase and limit the upside for the soybean market.

Strategy & outlook
Producers are 100 percent sold of the 2012/13 production and are 40 percent sold of 2013/14.
Sell 10 percent at $13.45 against the January contract.
Producers own November puts on 50 percent of 2013 production. Lift the puts if November trades to $11.29.

Lean cattle
Live cattle ended the week $.95 higher while feeder cattle ended $.25 higher. Last week, cash trade developed in the South at $123.00, $2 higher compared with a week ago.
In Nebraska, trade developed at $200, $3 higher when compared with the previous week. Live cattle and feeder cattle rallied on the strength of cash trade and confirmation of the bullish ideas for further cash gains for cattle that have not been fed the Zilmax feed additive.
A premium will be demanded by feedlots that do not feed Zilmax.
Cattle has bottomed for the summer but feedlots are nervous, looking for a place to hedge feedlot inventories.

Strategy & outlook
Producers currently have no hedges in place.
Feed costs should be covered on a hand to mouth basis as harvest lows will provide a better opportunity to lock in long term feed costs.
If weather turns adverse, look to buy out of money calls for feed protection.
(Source – http://www.farms.com/news/usda-reports-held-surprises-for-markets-66297.aspx)

USDA Reports Held Surprises For Markets Reviewed by on . Wheat: For the week, Chicago wheat closed $.03 3/4 lower; Kansas City wheat $.01 higher and Minneapolis wheat $.05 1/4 higher. Last week, exporters did not repo Wheat: For the week, Chicago wheat closed $.03 3/4 lower; Kansas City wheat $.01 higher and Minneapolis wheat $.05 1/4 higher. Last week, exporters did not repo Rating: 0

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