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By Alan Brugler
Ag Market Professional

Corn: Futures continue to grind into a harvest low. Export shipping delays and sky high rail freight are limiting shipment out of local terminals, pressuring basis. Some western Corn Belt states may be 100 million bushels deficit on storage space by the time harvest nears completion. Livestock and ethanol demand are excellent but not much of a factor for price when large supplies are available fresh out of the field.

Strategy: U.S. cash corn basis typically bottoms by Oct. 15. That could mean smaller Loan Deficiency Payments (LDP). Plan to take your LDPs or put the corn under loan and use the 60-day lock to buy time. The market is offering excellent returns to home storage by hedging in July futures. Continue to hold long December puts purchased last summer as a price floor until we have evidence of a seasonal bottom in flat price and/or basis.

Soybeans: Soy oil futures are firm on expanding soy diesel use. Oil/meal spreading is pressuring meal prices, as meal becomes a byproduct of oil production. The meal weakness is limiting rallies in the beans. There is also talk of a 3-billion bushel crop and 400 million bushel carryover. We’re not in that camp, but the crop clearly weathered the summer drought very well in most states. The United States has most of the world export market to itself until February, but South American prospects are the key to post harvest price action.

Strategy: Take hedge profits off the table by rolling those long puts from last summer to at-the-money strike prices. If the Gulf situation improves, there should be a good post harvest basis recovery into December.

Wheat: Futures have rallied sharply, with spec funds exiting part of their massive short position in Chicago futures as USDA has reduced the size of the 2005 crop and tightened the expected July 1 ending stocks. World ending stocks are smaller, offering the United States some export opportunities, mostly for hard wheat varieties.

Strategy: We avoid selling cash wheat between Labor Day and Thanksgiving, due to basis considerations. However, the current rally should be rewarded if you aren’t at least half sold on last year’s production. We have recommended storage hedges in December or March futures to protect unsold cash wheat. We also like bear put spreads to protect recent gains for wheat that won’t be sold until 2006.

Livestock: Meat futures have shown phenomenal gains since August, thanks to the loss of some poultry and beef production in the hurricane areas. Speculator funds are also buying meats on the inflation argument, given large federal deficit spending. Pork exports are strong, but U.S. consumer demand is iffy because of high energy costs, which are likely to eat even more of the budget during heating season.

Strategy: Near term prices are profitable, so stay current on cash marketings. Buying puts or put spreads makes sense to protect sales through year end.

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.