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By Alan Brugler
Ag Market Professional

Corn: The potential crop size has been reduced by dryness in the Eastern Corn Belt and heat in the west during pollination. It will take until September or October to get adequate data on ear weights, etc. To sustain new crop futures prices much above $2.40, it will take crop projections below 10 billion bushels. Our current projection is 10.1 billion bushels. Cheaper ocean freight is making us a little more competitive on exports.

Strategy: Maintain December bear put spreads or minimum price agreements to keep a price floor on new crop that is comfortably above loan rate. Increase cash sales and forward contracts on 10 to 20 cent rallies. Try to move any old cash corn on basis improvements of 3 to 5 cents that occur on futures market pull backs.

Soybeans: Projected world ending stocks are still at record high levels. Any shortage due to U.S. weather cutting yields is a "U.S. only" problem. That usually means U.S. prices go up, and U.S. export sales go down. China had purchased no soybeans from the United States for new crop delivery as of Aug. 1.

Strategy: It’s probably too early to price any 2006 crop, but the 2005 crop futures and forward contracts are well above the U.S. Department of Agriculture’ s (USDA) projected cash average price for the year. Don’t get wrapped up in the bull talk. Get some sales on the books at better-than-harvest basis. However, with the fund driven price volatility, you probably need to keep a few bushels back.

Wheat: The spring wheat crop is a little smaller than previously expected, due to head scab. The Soft Red Wheat crop appears to have excellent yield and quality, and should move into export channels as supplies of lower quality feed wheat dry up this fall. Wheat basis tends to get weaker as we approach corn harvest, with elevators reluctant to handle wheat then.

Strategy: We want to avoid selling cash wheat between Labor Day and Thanksgiving, due to basis considerations. The market is paying carries of 5 to 6 cents per month that can be locked in by selling December or March futures as a storage hedge. If USDA gives us a bullish surprise, consider buying call options to "defend" these storage hedges.

Livestock: Cattle prices have broken their three year uptrend, signaling weaker prices over time. Canadian cattle imports are running about 50 percent of pre-BSE levels, but they are still adding animals and beef to sell to consumers. Hogs were discounted sharply this summer, and the price cuts worked to improve exports and retail sales. Cold storage inventories appear to be shrinking because of fast food firms promoting bacon based sandwiches.

Strategy: We’ve now seen the anticipated bounce from the June lows in hogs. The market still has a substantial discount for fall/winter sales. We favor using bear put spreads to lock in profitable prices while leaving the way open for a further convergence toward the cash market. We anticipate seeing feeder cattle prices a little weaker during the fall, due to increased Canadian supplies offsetting traditional seasonal strength.

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 results are not necessarily indicative of future results. 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 402-697-3623, or visit the Web site at www.bruglermktg.com.