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By Alan Brugler, Ag Market Professional

Corn: Futures typically rally in early August while assessing the size of the growing crop. Then prices either go sideways into September or immediately begin a slide into harvest lows. As long as the crop size is above 10 billion bushels, the market will eventually drop, because the immediate problem becomes finding a place to store it, rather than whether we’ll run out in 2008 as ethanol demand expands.

Strategy: You should be about 50 percent forward priced on 2006 crop, using a scale up plan from $2.40 to $2.80 Dec. futures. Selling December 300 calls is another way of hedging at above market prices, or at least pocketing a few cents per bushel for waiting. We continue to oppose making sales for 2007 or 2008 production, with the exception of short-term hedging.

Soybeans: Futures sank close to life of contract lows ahead of the August crop report, due to improved moisture in the western Corn Belt, and ‘give up’ selling by some speculators as the weather forecast looked more moderate. Export business continues to be better than usual for this time period, and Brazilian producers are indicating a 7 to 8 percent cut in plantings for 2006/07 unless prices rally this fall (their planting season).

Strategy: Forward contracts should be in place for up to half of expected new crop production; with November 620 puts or bear put spreads purchased to protect the downside of the rest of the crop. Ohio typically has firmer basis bids in December and January.

Wheat: Minneapolis spring wheat futures were the bullish leader. When they failed to rally after the July crop report, that precipitated some serious profit taking. Chicago SRW futures are still in an uptrend, and export sales are up close to 40 percent from year ago because SRW is inexpensive relative to the other varieties. August rallies are meant to be sold if you won’t hold the wheat until December. Many elevators don’t want to handle it during corn harvest, and will weaken bids accordingly.

Strategy: Little action is required as long as September (and soon December) futures remain above the uptrend line. On closes below $4, purchasing long December puts would appear wise in order to create a nice price floor. Market focus will continue to be on HRW and HRS, with SRW trailing.

Livestock: The 45-week cycle for cattle futures bottomed in May, and ideally tops in mid-October, plus or minus four weeks. Slaughter numbers will decline from here into year end, supporting such a move. Shipments to Japan have also resumed, supporting the choice beef market. Hog futures typically decline in the fall, but have been getting a lift from heat related production problems and stellar export demand.

Strategy: Exited most of the short hedges in hogs and cattle, due to the re-opening of the Japanese beef market and smaller cattle numbers going into fall. Look to buy put options in hogs with October futures in the $63 to $66 range.