Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 12 September 2007
clock icon 5 minute read

LEAN HOGS on the CME finished up on Monday. The OCT’07LH contract closed at $66.450/cwt, up $0.150/cwt. DEC’07LH futures were up $0.375/cwt, closing at $68.325/cwt. China is expected to import more U.S. pork. The market mainly worked on rumors that China would buy another large order of pork by the end of the year but prospects for increasing supplies and unsubstantiated rumors kept a lid on. More February and April contracts were bought and October and December sold on ideas that China would be buying more U.S. pork near that time. However, futures fizzled by the end of the day amid no solid news of any such buying. Spreading and fund rolling limited gains in the nearby months but were seen as supportive of the back months. Index funds spread December/October about 4,600 lots on the day, over half of that coming at the end of the day. This limited nearby gains. USDA on Friday put the pork carcass cutout at $67.31/cwt, off $0.41/cwt. Steady cash hog markets provided some support on Monday as Tuesday was again expected to show steady cash hog prices amid good packer demand and a large supply of market-ready hogs on profitable packer margins. The average pork packer cutout margin for Monday was a positive $2.72/head, lower than last Friday, as well as one week by $6.23/head, according to HedgersEdge.com. The latest CME Lean Hog Index on Monday was placed at $64.04/cwt, down $0.42/cwt. Cash sellers should still be pushing hog sales this week. Near-term corn inputs should not be priced until after Wednesday.

CORN on the Chicago Board of Trade (CBOT) ended down on Monday. The SEPT’07 contract finished at $3.296/bu, off 1.4¢/bu from Friday. The DEC’07 contract finished lower at $3.460/bu, also off 1.4¢/bu. Harvest pressure continues to apply amid expectations that USDA will raise its U.S. corn crop forecast. USDA has already forecast a record 13.054 billion bu crop. Floor sources said the market was trading expectations that USDA would show the harvest at 4%-7% complete. USDA reported late on Monday that the U.S. corn crop was 8% complete at this time. Corn inspected for export was placed by USDA above estimates for 34-39 million bu at 43.958 million bu. Deliveries on the September corn contract were heavy at 1,610 lots. Funds sold 1,000-2,000 contracts. The CFTC Commitment of Traders report as of September 4 showed large speculators cutting net bull positions in CBOT corn by 18,000 contracts to 99,723 lots. Cash sellers having priced up to 50%-60% of this year’s production are okay. It might not be a bad idea to price a little more before Wednesday, ahead of USDA’s World Agriculture Supply Demand Estimate (WASDE) report due out by 8:30 a.m. that day. This year’s prices will most likely continue to decline somewhat toward harvest.

SOYBEAN futures on the Chicago Board of Trade (CBOT) ended up on Monday. The SEPT’07 contract closed at $9.034/bu, up 12.4¢/bu. NOV’07 futures closed at $9.180/bu, up 12.6¢/bu. Strong technical buying amid a falling dollar strengthened the soybean complex. However, resistance was provided by expectations that USDA would raise its U.S. soybean crop estimates on Wednesday, September 12. South American farmers are being watched now that some traders are thinking they may plant fewer soybean acres this season. It was also said today that China may cut its’07 crop forecast by 9.8% to 14.4 million tonnes (529 million bu) because of drought and more acres being planted to corn. Deliveries on the September contract were heavy at 1,539 lots. Soybeans inspected for export were down to 5.823 million bu, lower than the expected 8-13 million bu. Funds bought 3,000 soybean contracts. The CFTC Commitment of Traders report as of September 4 placed large bullish speculators at 91,300 contracts, up 6,500 lots. Cash soybeans were stronger in the U.S. Mid-Atlantic States in opening bids. You are in good shape if 70% of your ‘07 beans are priced at this time. You might consider pricing a little more before Wednesday. Pricing up to 25% of the 2008 crop at this time is still considered a good idea.

WHEAT futures in Chicago (CBOT) finished strong on Monday. SEPT’07 wheat futures closed at $8.490/bu, up 9.0¢/bu and a whopping $1.268/bu higher than two weeks ago. The JULY’08 contract finished at $5.920/bu, off 1.4¢/bu and near even with two weeks ago. Short-term demand is strong! Gains might have been higher in the September contract had profit-taking not occurred. Good export demand and closing world supplies were very supportive. Australia’s wheat crop may get cut without immediate and timely rains. USDA placed wheat inspected for export at 28.874 million bu, below estimates of between 31-36 million bu. September deliveries were light as farmers expect higher prices tomorrow. Funds bought 3,000 contracts while the CFTC Commitment of Traders report as of September 4 placed large speculators in long positions at 9,425 lots, up 1,300 contracts. Cash wheat in the Mid- Atlantic States was stronger on Monday. Opening bids ranged from 16.0¢/bu-18.0¢/bu higher amid slow farmer sales. Producers should still consider pricing up to 25% of the ’08 crop.

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