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By Alan Brugler, Ag Market Professional

Corn: Futures rallied in April to attract additional acreage after the Planting Intentions report showed only 78 million were planned. Now planting is nearing completion and soil moisture in the Corn Belt is much improved over last fall. The market is taking out some of the weather risk premium, but will put it back in should there be pollination worries this summer. Demand prospects are excellent for both domestic and export markets, but there is also concern about a sudden exodus of the speculative buyers.

Strategy: We’re forward selling 10 percent of expected new crop every dime higher. With all the speculative interest, hedgers will be better off buying at-the-money puts or spreads to create a price floor, while leaving the upside open. We are still opposed to making any 2007 or 2008 sales due to strong charts and insufficient carrying charges.

Soybeans: Futures rallied on the back of surging soy oil prices during late April. That was tied to higher diesel and crude oil prices. The soy oil market likely got ahead of itself, as the processing capacity doesn’t exist yet to rapidly convert our massive stocks of soy oil into biodiesel. Thus, bean bulls need some help from soybean meal if we’re to get bean prices above the $6 mark in old crop, or $6.40 in new crop. Rapid planting progress does suggest a few less soybean acres than were shown in the March U.S. Department of Agriculture report.

Strategy: Old crop beans should be gone; except for "gambling stocks" you will hold into summer or fall. Look at putting any long term beans under loan before May 31, with an eye toward either a summer rally or marketing loan gains in the fall if the crop is good. Some forward contracts should be in place on new crop, with November 620 puts or bear put spreads purchased to protect the downside of the rest of the crop.

Wheat: Futures have been very buoyant, thanks to poor growing conditions for the Plains HRW crop. Our SRW crop in the eastern Corn Belt is in great shape, and supplies will likely be surplus. However, a rising tide floats all boats!

Strategy: You should have some forward contracts in place for harvest delivery, as we’ve already met the Price & Probability objectives for July CBT wheat. Our clients have done that on 40 to 50 percent of production. July 360 or 370 put options (either alone or in spreads to reduce premium costs) are a good tool to put a price floor under your less certain production.

Livestock: Cattle futures remain at a discount to the cash market, anticipating further cash cattle weakness as we get into peak slaughter numbers. Wholesale beef prices have shown signs of life as grilling season approaches, but cheap chicken continues to limit price hikes in both beef and pork at the meat counter. Hogs have rallied in normal spring fashion, as slaughter numbers decline seasonally. They could top out within the next couple weeks from a technical standpoint.

Strategy: We must remain fully hedged in cattle until the boxed beef and cash markets show some sign of a bottom. Hog producers should begin to look at put option coverage to take advantage of the recent rise in summer futures. This is also a better time for short term packer contracts than we’ve seen for a while.