Weekly Roberts Report
US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
21 May 2008
6 minute read
LEAN HOGS on the CME were mixed on Monday with nearby’s down while back months were gainers. JUNE’08LH futures were off $0.225/cwt closing at $76.125/cwt. July and August lost ground while OCT’08LH were up $0.325/cwt at $73.425/cwt. Lean hog trading backed off as a result of USDA’s pork cutout on Friday and worries about this week’s cash trade direction. USDA on Friday put the pork cutout at $81.89/cwt, down $0.36/cwt. With no clear market direction funds laid out of trading. Packers were hoping for steady to weaker cash bids on Tuesday expecting processing to slow down heading into the holiday weekend. The CME Lean Hog index was up $0.64/cwt at $82.72/cwt. China’s earthquake last week killed an estimated 792,000 of 60 million head as pork prices rose in that country by 0.21% last week. Prices in April increased 68.3%. According to HedgersEdge.com, the average pork plant margin for Monday was placed at a negative $2.30/head compared to a negative $5.55/head last week at this time. This was based on the average buy of $59.77/cwt vs. a breakeven buy of $58.92/cwt. It is a good idea to keep market hogs sold as soon as they are ready. Pricing corn inputs by Wednesday is a very good idea.
CORN on the Chicago Board of Trade (CBOT) closed down on light trading despite an attempted rally at midday on Monday. The JULY’08 contract finished at $5.886/bu, off 4.2¢/bu. The DEC’08 contract closed down 3.6¢/bu at $6.130/bu and 24.6¢/bu lower than this time last week. Good planting weather and lower cash prices pressured prices. USDA late Monday put the U.S. corn crop at 73% planted vs. the 5-year average of 88% and 88% planted this time last year. The crop was 51% planted this time last week. The market traded 75% planted all day. Yield trend lines are not likely to be challenged if the crop doesn’t get into the ground. Most genetic benefits address drought and head tolerance rather than shorter maturity time. A development in Congress reported U.S. Senator Kay Bailey Hutchison introducing a statute that would freeze the federal mandate for corn-based ethanol at 9 bi gals arguing that too much corn in the gas tank was pressuring food prices. However, U.S. Agriculture Secretary Ed Schafer downplayed the call for change countering that ethanol is not having a major impact on food prices. Cash corn in the U.S. Midwest was weaker on Monday while cash corn in the U.S. Mid-Atlantic States was steady to weaker down 2.0¢/bu – 4.0¢/bu on both old crop and new crop corn. In export news, USDA said on Monday that 27.318 mi bu of U.S. corn were inspected for export vs. expectations for between 35-40 mi bu. The CFTC Commitment of Traders report had large speculators in bullish positions increasing by 7,300 lots to 180,291 contracts. There is still strong fundamental support going into the growing season and as trading goes deeper into a weather related market. Hopefully 60% of the ’08 crop has been priced. Watch for weather rallies if you want to price more than that, however, make sure you can deliver.
SOYBEAN futures on the Chicago Board of Trade (CBOT) were off in sluggish trading on Monday. The JULY’08 contract finished at $13.330/bu, off 45.0¢/bu from last week. The NOV’08 soybean contract ended at $13.220/bu, off 27.2¢/bu but 32.8¢/bu higher than last Monday’s close. The market was pressured by talk that the Argentinean farmer strike was near a deal, technical weakness, and good planting outlook for soybeans. USDA placed the U.S. soybean seedings at 27% vs. 11% planted last week and a 52% 5-year average. The 14-day Relative Strength Index (RSI) for November 2008 soybeans finished at 73.02. Anything over 70 is considered overbought and anything lower than 30 oversold. The RSI may remain high and go even higher as all moving averages have not diverged lower yet. However, any news of the end of the Argentinean farmer strike and/or good planting weather will pressure prices. In addition, the gap in the November contract established on May 9 will tend to want to be filled around the $12.45/bu range. USDA placed soybeansinspected- for-export at 8.531 mi bu vs. estimates for between 9 – 13 mi bu. Cash soybeans in the U.S. Gulf were weak, as well as those in the U.S. Mid-Atlantic States, down 27¢/bu – 45¢/bu. The CFTC Commitment of Traders report showed large speculators increasing bull positions by 5,000 contracts to 82,705 lots. It is a good idea to get up to 50% of the ’08 crop priced. It is still a good idea to try and forward price up to 15% of the ’09 crop if you can.
WHEAT futures in Chicago (CBOT) closed up on technical trading Monday. The JULY’08 contract closed at $7.910/bu, up 15.4¢/bu but 14.4¢/bu lower than last Monday. Near oversold conditions could not contain buyer enthusiasm amid expectations for new export interest from Iraq and others. Egypt is said to be seeking between 55,000 tonnes (2.0 mi bu) to 60,000 tonnes (2.2 mi bu). Bangladesh issued a tender for 100,000 tonnes (3.7 mi bu) while South Korea bought 21,800 tonnes (801,019 bu) of U.S. wheat. USDA placed U.S. wheat-inspected-for-export at 12.003 mi bu vs. expectations for between 17 – 21 mi bu. Continued drought conditions in eastern Australia added support. Southern and southeastern Australian farmers received much needed rain encouraging them to plant full tilt. However, it was noted that the key wheat producing region of New South Wales was mostly missed by the rain. Weather in the U.S. Plains was improving as the crop advances toward harvest. The supplement to CFTS’s Friday Commitment of Traders report had large speculators in net bear positions expanding those positions by 8,000 contracts to 20,482 lots. It might be a good idea to get to 60% priced in 2008 crop wheat.
CORN on the Chicago Board of Trade (CBOT) closed down on light trading despite an attempted rally at midday on Monday. The JULY’08 contract finished at $5.886/bu, off 4.2¢/bu. The DEC’08 contract closed down 3.6¢/bu at $6.130/bu and 24.6¢/bu lower than this time last week. Good planting weather and lower cash prices pressured prices. USDA late Monday put the U.S. corn crop at 73% planted vs. the 5-year average of 88% and 88% planted this time last year. The crop was 51% planted this time last week. The market traded 75% planted all day. Yield trend lines are not likely to be challenged if the crop doesn’t get into the ground. Most genetic benefits address drought and head tolerance rather than shorter maturity time. A development in Congress reported U.S. Senator Kay Bailey Hutchison introducing a statute that would freeze the federal mandate for corn-based ethanol at 9 bi gals arguing that too much corn in the gas tank was pressuring food prices. However, U.S. Agriculture Secretary Ed Schafer downplayed the call for change countering that ethanol is not having a major impact on food prices. Cash corn in the U.S. Midwest was weaker on Monday while cash corn in the U.S. Mid-Atlantic States was steady to weaker down 2.0¢/bu – 4.0¢/bu on both old crop and new crop corn. In export news, USDA said on Monday that 27.318 mi bu of U.S. corn were inspected for export vs. expectations for between 35-40 mi bu. The CFTC Commitment of Traders report had large speculators in bullish positions increasing by 7,300 lots to 180,291 contracts. There is still strong fundamental support going into the growing season and as trading goes deeper into a weather related market. Hopefully 60% of the ’08 crop has been priced. Watch for weather rallies if you want to price more than that, however, make sure you can deliver.
SOYBEAN futures on the Chicago Board of Trade (CBOT) were off in sluggish trading on Monday. The JULY’08 contract finished at $13.330/bu, off 45.0¢/bu from last week. The NOV’08 soybean contract ended at $13.220/bu, off 27.2¢/bu but 32.8¢/bu higher than last Monday’s close. The market was pressured by talk that the Argentinean farmer strike was near a deal, technical weakness, and good planting outlook for soybeans. USDA placed the U.S. soybean seedings at 27% vs. 11% planted last week and a 52% 5-year average. The 14-day Relative Strength Index (RSI) for November 2008 soybeans finished at 73.02. Anything over 70 is considered overbought and anything lower than 30 oversold. The RSI may remain high and go even higher as all moving averages have not diverged lower yet. However, any news of the end of the Argentinean farmer strike and/or good planting weather will pressure prices. In addition, the gap in the November contract established on May 9 will tend to want to be filled around the $12.45/bu range. USDA placed soybeansinspected- for-export at 8.531 mi bu vs. estimates for between 9 – 13 mi bu. Cash soybeans in the U.S. Gulf were weak, as well as those in the U.S. Mid-Atlantic States, down 27¢/bu – 45¢/bu. The CFTC Commitment of Traders report showed large speculators increasing bull positions by 5,000 contracts to 82,705 lots. It is a good idea to get up to 50% of the ’08 crop priced. It is still a good idea to try and forward price up to 15% of the ’09 crop if you can.
WHEAT futures in Chicago (CBOT) closed up on technical trading Monday. The JULY’08 contract closed at $7.910/bu, up 15.4¢/bu but 14.4¢/bu lower than last Monday. Near oversold conditions could not contain buyer enthusiasm amid expectations for new export interest from Iraq and others. Egypt is said to be seeking between 55,000 tonnes (2.0 mi bu) to 60,000 tonnes (2.2 mi bu). Bangladesh issued a tender for 100,000 tonnes (3.7 mi bu) while South Korea bought 21,800 tonnes (801,019 bu) of U.S. wheat. USDA placed U.S. wheat-inspected-for-export at 12.003 mi bu vs. expectations for between 17 – 21 mi bu. Continued drought conditions in eastern Australia added support. Southern and southeastern Australian farmers received much needed rain encouraging them to plant full tilt. However, it was noted that the key wheat producing region of New South Wales was mostly missed by the rain. Weather in the U.S. Plains was improving as the crop advances toward harvest. The supplement to CFTS’s Friday Commitment of Traders report had large speculators in net bear positions expanding those positions by 8,000 contracts to 20,482 lots. It might be a good idea to get to 60% priced in 2008 crop wheat.
