Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 15 August 2007
clock icon 6 minute read
LEAN HOGS on the CME were up on Monday. AUG’07LH futures closed at $73.950/cwt, up $0.525/cwt but $0.625/cwt lower than last Monday. This contract expires on Tuesday. The OCT’07LH contract closed at $71.400/cwt, up $0.600/cwt but $3.650/cwt lower than a week ago. Short covering guided futures higher despite lower cash prices in several places. Higher cattle prices were supportive. Spreading was noted in December/October. Traders are still expecting China to raise export levels. However, USDA on Friday lowered its 2007 pork exports by 0.038 billion lbs from last year’s actual numbers to 2.957 billion lbs. USDA pork cutout data for Friday was up $0.77/cwt at $71.37/cwt. This was mostly due to a very nice gain in the average loin price ahead of Labor Day sales. The latest CME Lean Hog Index was up $0.18/cwt at $73.32/cwt. The average pork packer cutout margin for Monday was a negative $4.15/head, better than last Friday’s by $3.00/head and $2.20/head better than last Monday, according to HedgersEdge.com. Cash sellers should still try and push hog sales as soon as they are finished in this hot weather.

CORN on the Chicago Board of Trade (CBOT) closed mixed on Monday. The SEPT’07 contract finished at $3.310/bu, off 2.0¢/bu from last close while 5.4¢/bu higher than last Monday. The DEC’07 contract finished at $3.490/bu, off 1.4¢/bu while gaining 6.0¢/bu in a week. Last week’s USDA World Agricultural Supply/Demand Estimates (WASDE) report tempered the market showing prospects for a record crop with farmers harvesting more corn than in 1933. The first farmer survey of this year shows production up 214 million bu to 13.1 billion bu, exports up 150 million bu, ending stocks at 1.5 billion bu, up 14 million bu from last report and 379 million bu higher than last year. The season average farm price was unchanged at $2.80/bu-$3.40/bu. The market was supported by expectations for a lower USDA crop condition report for the sixth straight week. However, USDA kept the good-to-excellent crop rating at 56%, the same as last week. Crop conditions in my home state, Virginia were not as good this week with agents reporting in many places that up to 70% of the corn crop is lost due to drought. Temperatures over 100+ were recorded last week in many parts of the state. Export sales remain strong though, with USDA reporting 42.6 million bu inspected for export. This exceeded expectations of between 40-45 million bu. A sale of 120,000 tonnes (4.7 million bu) to Egypt for a ‘07/’08 delivery was reported by private exporters. Also, buying U.S. corn were a consortium of Israeli buyers at 56,000 tonnes (2.2 million bu). Funds were mostly net buyers of corn buying 2,500 contracts. The CFTC Commitment of Traders report had large speculators growing bullish CBOT corn positions by 8,000 contracts to 102,253 lots as of August 7. Cash corn in the U.S. Midwest was mostly steady while cash bids for corn in the U.S. Mid-Atlantic States opened 2¢/bu– 5¢/bu higher in many places. Cash sellers having priced up to 50%-60% of this year’s production are in a good mood, if their crop is making. It would be a very good time to have up to 50% of the 2008 crop priced now as the DEC’08 corn contract closed at $3.990/bu, up 0.6¢/bu.

SOYBEAN futures on the Chicago Board of Trade (CBOT) ended higher on Monday. The AUG’07 contract closed at $8.610/bu, up 11.0 ¢/bu and 35.0¢/bu higher than this time last week. NOV’07 futures closed at $8.816/bu, up 10.0¢/bu and 31.6¢/bu higher than last Monday’s close. Hot, dry weather was bullish news for the market as this is a critical pod-filling stage for soybeans. The USDA WASDE report was also supportive. USDA lowered soybean production by 1.2 bu/ac to 41.5 bu/ac; leaving total production the same as last month at 2.63 billion bu. This is 653 million bu lower than last year’s crop. Soybean ending stocks were lowered 25 million bu to 220 million bu. This is due to a reduced carryin. USDA left the projected U.S. average farm price for soybeans unchanged at $7.25/bu-$8.25/bu. As with corn, soybean traders were trading expectations that USDA would lower the good-to-excellent crop rating by 1-2 percentage points. USDA’s ratings remained the same for soybeans, holding at 56%. Weekly export inspections were reported below trade estimates of between 5-10 million bu at 3.8 million bu. U.S. soybeans are expensive relative to South American soybeans. Funds bought 3,500 lots, several floor sources said. The CFTC Commitment of Traders report showed as of August 7, large speculators increasing bullish CBOT soybean positions by 3,500 lots to 86, 390 contracts. Cash soybeans in the U.S. Midwest were steady as farmers are reluctant to sell more beans there. Opening bids for soybeans in the U.S. Mid-Atlantic States were weaker by as much as 6.0¢/bu-10.0¢/bu weaker as farmers sold aggressively toward the end of last week. It might be a good idea to price up to 70% of the ’07 crop at this time with an eye for pricing up to 25% of the 2008 crop.

futures in Chicago (CBOT) rose somewhat while the nearby September contract closed lower on Monday. SEPT’07 wheat futures closed at $6.66/bu, 0.4¢/bu lower than last Friday but dead even with last Monday’s close. The JULY’08 contract finished at $5.800/bu, up 11.0¢/bu and 21.4¢/bu higher than a week ago. JULY’08 futures have gained 47.2¢/bu in two weeks now. Futures in Kansas City ended higher as well. Tighter global supplies were supportive. USDA’s WASDE report was bullish. Ending stocks for the ’08 year were lowered 14 million bu to 404 million bu on lower production. Production was lowered 25 million bu to 2.114 billion bu. Exports were raised 25 million bu to 1.075 billion bu. The average farm price was raised 30.0¢/bu on both ends of the range to $5.10/bu-$5.70/bu. USDA reported U.S. wheat inspected for export above estimates for 16-22 million bu at 24.4 million bu even though Egypt bought 115,000 tonnes (4.23 million bu) of Russian wheat after spurning U.S. offerings. South Korea tendered an offer for 46,600 tonnes (1.7 million bu) of U.S. wheat while Japan was seeking 30,500 tonnes (1.1 million bu) from any supplier. Exports from the Ukraine were off at 105,900 tonnes (3.4 million bu) in July due to export restrictions. The CFTC Commitment of Traders report shows as of Aug. 7, large speculators increasing bullish positions in CBOT wheat by nearly 6,000 contracts at 7,156 lots. Cash wheat in the U.S. Mid-Atlantic States was weaker by up to 9¢/bu. Producers should consider remaining only 25% priced in the ’08 crop.

December 2007 Corn, August 13, 2007

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