Weekly Roberts Report
US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.LEAN HOGS on the CME were off on Monday. JUNE’08LH futures were off $1.425/cwt closing at
$76.325/cwt. The JULY’08LH contract finished at $76.200/cwt, down $1.900/cwt. OCT’08LH futures
closed down $1.650/cwt at $72.900/cwt. Fund selling amid profit taking from gains posted last Friday and
long liquidations pressured prices. Higher corn prices and bearish supply fundamentals were no help either.
June/July and August/July spreading was noted. Cash prices were steady to weaker as packer margins were
estimated up $1.90/head at $7.45/head based on an average buy at $54.47/cwt vs. an estimated breakeven of
$57.33/cwt. The latest CME Lean Hog Index stood at $78.39/cwt, down $0.94/cwt. Slaughter weights were
slightly lower last week as producers pushed hogs off feeding floors. It is a good idea to keep market hogs to
heavier weights if possible and if near term corn inputs are priced. Pricing corn inputs at this time is not a
very good idea.
CORN on the Chicago Board of Trade (CBOT) registered gains on Monday amid surging crude oil. Gains
were limited as the market traded cautiously ahead of possible policy changes on trading limits for large funds.
The JULY’08 contract finished at $6.156/bu, up 16.4¢/bu and 27.0¢/bu higher than two weeks ago at this time.
The DEC’08 contract closed up 16.6¢/bu at $6.432/bu and 30.2¢/bu higher than Monday before last. Corn
prices gained ground on concerns that yields won’t make expectations based on more rain in the cornbelt. The
market traded ideas that this will push more soybeans to get planted on acres originally planned for corn.
USDA on Monday reported the U.S. corn crop 60%-65% in good to excellent condition vs. 78% this time last
year. Continued cooler temperatures along with estimates for about one fourth of the U.S. corn crop going for
ethanol are seen as bullish demand signals. In export news, USDA reported that 120,000 tonnes (4.7 mi bu) of
U.S. corn was sold to Egypt for delivery soon. USDA also put corn-inspected-for-export at 37.376 mi bu vs.
expectations for between 32-37 mi bu. U.S. Midwest cash corn was noted as steady to firm early on Monday
with cash bids for corn in the U.S. Mid-Atlantic States ranging 23.0¢/bu – 49.0¢/bu lower. Although funds
reduced net bull positions by 3,500 lots to 181, 864 contracts for the week ended May 27, they were noted as
buying over 7,000 contracts on Monday. 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) ended up slightly on Monday. The JULY’08
contract finished at $13.654/bu, up 2.0¢/bu from last week and up 32.4¢/bu over two weeks ago at this time.
The NOV’08 soybean contract ended at $13.584/bu, up 4.0¢/bu and 36.4¢/bu higher than Monday before last.
Soybeans were supported by news that the ongoing farm strike in Argentina will continue and the slow
planting pace in the U.S. Prices were pressured from worries that more corn acres getting planted to soybeans
because of heavy weather limitations on corn seedings. USDA reported on Monday that the U.S. soybean
crop was about 70% - 75% planted. Gains in crude oil were also seen as supportive. Cash soybeans prices
were given a lift on news that no more soybeans will be coming from South America for a few days. Soybean
prices in the U.S. Mid-Atlantic States were steady to slightly lower ranging from 1.0¢/bu to 3.0¢/bu lower.
USDA reported that 9.887 mi bu of soybeans were inspected for export vs. estimates for between 6 – 11 mi
bu. As funds reduced net bull positions in soybeans by about 2,800 contracts they still bought just over 1,000
lots for the week ended May 27. It is a very good idea to get up to 60% of the ’08 crop priced. Most of my
producers report that very few elevators are pricing the ’09 crop. If you can find someone who will it is a very
good idea to try and forward price up to 20% of the ’09 crop.
WHEAT futures in Chicago (CBOT) closed up on Monday. The JULY’08 contract closed at $7.824/bu, up
21.0¢/bu but 8.6¢/bu lower than last Monday. JULY’09 wheat futures closed up 19.4¢/bu at $8.580/bu. Fund
buying on technical signals and short covering fueled the rally even though fundamental news was not
supportive. The funds had money to spend from improved crude oil prices and needed to balance the books in
commodities so they picked wheat today. News that Saudi Arabia, usually not an importer of wheat, was
about to seek world wheat. Good export numbers also provided price strength. USDA reported that 21.489
mi bu of U.S. wheat were inspected for export vs. estimates for between 8 – 13 mi bu even though Algeria
cancelled the sale of 100,000 tonnes (3.67 mi bu) of U.S. wheat. Dry weather in the U.S. Plains was of mild
concern to the market. Funds increased net bear positions to 30,592 lots, an increase of 9,000 contracts. It
might be a good idea to get the entire 2008 wheat crop sold.
