Weekly Roberts Market Report22 October 2012
Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University
US - CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The DEC’12 contract closed at $7.372/bu; down 15.4 ¢ /bu and 3.75 ¢ /bu lower than last week at this time. MAR’13 corn futures closed at $7.372/bu; down 15.4 ¢ /bu and 3.25 cents lower than last report, writes Michael T Roberts.
The DEC’13 contract closed at $6.262/bu; down 7.75 ¢ /bu but 1.75 cents higher than a week ago. Corn closed sharply lower Monday on spillover pressure from the soybean market. Bearish commercial outlook has been growing more bullish Weekly Roberts Agriculture Commodity Market Report October 16, 2012 The North Carolina Dairy Foundation2 recently indicated by the strengthening inverse in the forward series of futures spreads. However, exports were bearish. USDA put corn-inspected-for-export at 17.235 mb vs. estimates for 18-20 mb. This is below the 22.3 mb needed to stay on pace with USDA’s revised demand projection of 1.15 bb. Please see chart:
The national average basis is -16
/bu under CBOT December futures. Cash corn in North Carolina was
/bu lower with prices ranging from $7.26/bu - $8.12/bu. New crop corn cash price ranged from
$6.41/bu - $6.71/bu.
SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. NOV’12 futures closed at $14.924/bu; off 30.0 ¢ /bu; 58.0 ¢ /bu lower than last report. The MAR’13 contract closed at $14.660/bu; down 26.0 cents ¢ /bu and 40.0 ¢ /bu lower than a week ago. NOV’13 futures closed at $13.244/bu; off 14.0 ¢ /bu but 3.0 cents higher than last Monday. Speculator long-liquidation pressured prices lower while strong exports weren’t near enough to offset losses. USDA put soybeans-inspectedfor-export at 57.824 mb vs. estimates for 23-26 mb. Weekly inspections – the largest one week sale in almost two years – came in well above the 24.3 mb needed to stay on pace with USDA’s revised demand projection of 1.265 bb. South America looks like it will continue to be challenged by adverse weather. Please see chart:
The national average basis for soybeans is -48.0
/bu under CBOT November futures. Basis in North
Carolina were -30
/bu ranging from $15.17/bu at processors and $14.18/bu at feed mills and $14.47/bu at
elevators. New crop soybeans ranged from $12.50-14.46/bu.
WHEAT futures in Chicago (CBOT) closed down on Monday. DEC’12 wheat futures finished at $8.482/bu; down 8.5 ¢ /bu and 12.75 ¢ /bu lower than a week ago. The JULY’13 contract closed at $8.330/bu; down 8.25 ¢ /bu and 7.75 ¢ /bu lower than last report. Wheat was pressured by spillover losses in corn and soybeans. Buying by commercials and speculators near the close brought wheat prices off session lows. Exports were bearish with USDA putting wheat-inspected-for-export at 7.003 mb vs. estimates for 12-13 mb. This well below the 23 mb needed to stay on pace with USDA’s revised demand projection of 1.15 bb. Fundamentally global stocks are tightening a bit. The United Kingdom’s farm ministry lowered their wheat harvest to 13.3 mmt (4.4 mb) and 13% lower than last year’s UK wheat production. Soft Red Winter Wheat’s national average basis was placed at -37 ¢ /bu under CBOT December futures; up 1.0 ¢ /bu. Hard Red Winter Wheat was placed at -58 ¢ /bu under Kansas City December futures; up 1.0 ¢ /bu. Hard Red Spring Wheat national average basis was placed at -71 ¢ /bu under the Minneapolis December futures contract; up 1.0 ¢ /bu but 7.01.0 ¢ /bu lower than a week ago. New crop wheat in North Carolina ranged from $7.30-7.73/bu.
DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed mixed on Monday. The OCT’12DA contract closed up $0.02/cwt at $21.16/cwt; $0.11/cwt higher than last report. DEC’12DA futures closed at $20.63/cwt; down $0.17/cwt and $0.01/cwt lower than a week ago. The MAR’13DA contract closed at $19.05/cwt; down $0.05/cwt but $0.07/cwt over last report. Fundamentally supply is meeting production demand. However, floor traders say manufacturers would like more milk but are unwilling to buy much extra due to premiums for good quality milk. They say milk will be bought as needed. Manufactured product supply is not exceeding demand enough to increase storage supply. However, slow production growth is improving supply somewhat. Producers talked with this past week are encouraged a bit of decreasing grain prices. However, we don’t know how long those will hold after 4 the harvest flush of supply. Cheese demand is expected to slow once the holidays are over. As long as cheese price remains stable there will most likely be limited movement in butter. Butter demand may improve in the short run as stores in the Southeast are using butter as a loss leader to get consumers into stores. Class III futures were: 3 months out = $20. 92/cwt ($0.18/cwt over last report); 6 months out = $20.14/cwt ($0.19/cwt higher than a week ago); 9 months out = $62/cwt ($0.17/cwt higher than last Monday); and 12 months out = $19.35/cwt ($0.13/cwt over last report). This week variable cost of production for the average North Carolina conventional 200 cow dairy with a 23,000 lb average is $22.33/cwt; $0.42/cwt lower than last Monday.
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed mostly up on Monday. The OCT’12LC contract closed at $124.150/cwt; up $0.250/cwt and $0.80/cwt over last report. DEC’12LC futures closed at $125.975/cwt; up $0.475/cwt and $0.425/cwt higher than a week ago. APR’13LC futures closed at $133.400/cwt; up $0.100/cwt and $0.35/cwt over this time last week. Tightening supplies and higher retail prices ahead of the holidays supported prices. Slowing slaughter cattle supply as feedlots thin out ahead of winter and on short replacements is not meeting packer demand. USDA’s latest boxed-beef prices were placed at $193.96/cwt; up $2.29/cwt and $3.97/cwt higher than a week ago. U.S. consumers continue to buy beef on seasonal patterns regardless of higher prices. Beef processors limited their slaughter schedules last week due to poor margins. The USDA estimated cattle slaughter at 628,000 head, down 3.4% from a year ago. Year-to-date slaughter stands at 4.2% below 2011. According to HedgersEdge.com, the average packer margin was raised $11.20/hd to a negative $32.40/head based on the average buy of $123.38/cwt vs. the breakeven of $120.74/cwt. Late Monday, October 15, 2012 USDA put the 5-area weekly steer average at $123.20/cwt. Please see graph:
FEEDER CATTLE at the CME closed up on Monday. The OCT’12FC contract closed up $1.250/cwt at $144.350/cwt; $0.475/cwt lower than a week ago. NOV’12FC futures closed at $145.550/cwt; up $1.325/cwt and $0.75/cwt over last report. APR’13FC futures closed at $151.500/cwt; up $0.800/cwt but $2.450/cwt lower than this time last Monday. Cash trading was mostly quiet but demand is expected to be strong on shorter supplies in the pipeline. For Monday 10.15.12; estimated receipts at the closely watched Oklahoma City market were put at 9,150 head vs. last week’s 7,264 head and 9,441 head this time last year. Compared to the last week demand was again not well tested for feeder heifers and steers. Demand was considered good for the light supply. Steer and heifer calves were steady-to-$2/cwt higher. Demand was good for long weaned calves with some flesh on them while the numbers of weaned calves was 5 increased. Quality was plain-to-attractive with some reputation brand calves included. Rain and warmer temperatures are forecast for the next few days. Newly planted wheat in some areas is emerging.
LEAN HOGS on the CME finished mostly down on Monday. The DEC’12LH contract closed at $78.550/cwt; up $0.175/cwt and $1.675/cwt over last report. APR’13 futures closed at $89.950/cwt; down 6 $0.500/cwt and $2.70/cwt lower than this time last week. Hog futures were pressured lower lately on higher feed costs but were supported today on the continued decline in corn futures suggesting easing feed costs for a bit. However, I believe this will be short-lived after the harvest flush is over. Good prices are also supported by thinning herds. Demand is expected to soften in the coming weeks as consumers switch to turkeys for Thanksgiving. This is reflected in deferred months. Pit sources said there were a few bets being placed on lower prices based on slower demand coupled with lower prices for feed leading to an over-supplied market during the winter and spring months. Cash hogs were mostly flat from Friday as packers adjusted prices to fit their inventory positions and line needs for the week. Most of the buying interest was for loads to arrive at the plants later in the week. Fundamentally supplies of slaughter-ready hogs may be nearing seasonal peak with numbers expected to remain higher than last year through midNovember. USDA’s pork carcass cutout was placed at $87.86/cwt, up $0.83/cwt from Friday. According to HedgersEdge.com, the average packer margin was raised $3.32/hd at a positive $4.50/head based on the average buy of $60.80/cwt vs. the breakeven of $62.53/cwt. The latest CME Lean Hog index was estimated at 80.33; up 0.43 but 0.13 lower than a week ago.