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By Alan Brugler

Corn: Rapid planting progress has analysts projecting the second highest average yields in history. With weak ethanol prices and sluggish corn export sales, the market is trying to stimulate demand for this potentially record large corn supply (after including the largest carryover stocks since 1987/88). Weather rallies of 10 to 20 cents are possible at any time, but easier if the U.S. dollar is also weaker, and/or fuel prices are lower. The latter makes ocean freight from U.S. origins more competitive.

Strategy: Look to take LDP’s before May 31 if you missed earlier opportunities, or put the corn under loan. Maintain December bear put spreads or elevator variants to keep a floor on new crop that is above loan rate. Increase sales on 10 to 20 cent rallies.

Soybeans: Futures have built in a substantial risk premium, primarily due to the unknown impact of soybean rust on 2005 U.S. yields. The decreased size of the Brazilian crop (51 Million Metric Tons) and strong U.S. export sales make a large U.S. crop in 2005 a necessity. Increased South American sales, reduced Chinese buying interest, and comfort with U.S. crop conditions all could result in a dollar per bushel price drop at some point in the future.

Strategy: You should be well covered on both old crop and new crop sales, after a February-March rally that equaled a typical 12 month move. We’d limit gambling stocks of old crop to 15 to 20 percent of production. Long November 600 or 620 puts make sense to put a floor under new crop. Consider selling November 540 puts against them to offset time premium/cushion rallies.

Wheat: The wheat market has a strong tendency to decline from a winter high into a harvest low occurring between May and September. We rallied against the tendency with the help of index fund buying in March, but excellent winter wheat crop ratings are threatening a crop at least 100 million bushels larger than last year. At prices above $3 the United States can’t increase exports that quickly.

Strategy: We recommended heavy new crop forward sales and put options earlier. If you missed some of those, you’re looking for a weather rally, or planning on holding for a post harvest rebound.

Livestock: Seasonally reduced slaughter is supporting cash hog and pork prices. Futures have been flat, having already anticipated a $10 rise in cash hogs. There are signs of expansion in both the United States and Canada, keeping fall futures at a discount. Cattle slaughter has risen sharply in recent weeks. The average May cash cattle price is 3 percent below April. If that pattern holds, the cash average price for May will be a little over $89.

Strategy: Summer hog futures are very attractive, and sales must be made on any sign that the seasonal rally in cash hogs is ending prematurely. Feeder cattle are scarce this year, and long hedge coverage is recommended. Cattle crush spreads continue to work well as a way of locking in profitable margins and riding out the big weekly swings in prices.

Disclaimer: There is a substantial risk of loss in futures and options trading, and losses may exceed the initial investment. Not all risk management tools are appropriate for all producers. This article should not be seen as a solicitation to trade futures or options. Past performance is not necessarily an indicator of future success. Opinions expressed are those of Brugler Marketing & Management LLC, which is solely responsible for the content.

Brugler Marketing & Management LLC is a registered Commodity Trading Advisor and member of the National Futures Association. Brugler Marketing offers sophisticated analysis and daily risk management advice to Ohio producers through its Ag Market Professional and Special Research Reports publications. For additional information, call 402-697-0657, or visit the Web site at www.bruglermktg.com