Weekly Roberts Report

by 5m Editor
16 July 2008, at 6:53am

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.

This report is being written in Greensboro, NC where I am attending the National Association of County Agricultural Agents (NACAA) annual meeting. Agriculture agents from all over the U.S. are in attendance and have been sharing a wealth of information with me regarding crops in their respective areas. Short story … crops in Iowa and other flooded places aren’t in as bad a shape as one might expect. This could mean more bearish than bullish updated numbers from USDA in the next report. Conditions in reportedly droughty areas aren’t as bad as reported in the media either. Result? Crops are going to do better in these areas as well. Wheat yields and test weights are running 10%-15% better than expected. Cattle feeder producers in most areas are most likely going to have more hay this year than last amid falling feed prices. There are spotty areas that have had tremendous weather problems but according to many agents questioned over the last two days overall crop production is looking rather positive at this point in time. On a less positive note, input prices are not coming down at the same rate futures and cash commodity prices are. Whether the non-farming reader believes it not, farmers are facing prospects for a very tough year. Most Agriculture agents report their producers are going to barely cover variable input costs. Now, with that out of the way, on to the rest of the report.

LEAN HOGS on the CME closed down on Monday with the exception of the August contract. The JULY’08LH contract finished at $74.800/cwt, off $0.175/cwt but $2.400/cwt higher than last Monday’s close. The AUG’08LH contract closed at $74.750/cwt, up $0.100/cwt but $4.425/cwt higher than a week ago. Traders were expectant that the market will turn to pork over beef in the near term. Long liquidation in the July contract ahead of expiration on Tuesday pressured that contract. Declining feed prices were supportive limiting the skid. Cash hogs were steady to firm but should show some softening as packers fill harvest lines. The average pork plant margin for Monday was estimated at $10.10/head based on the average buy at $54.44/cwt vs. a breakeven of $58.35/cwt. The CME Lean Hog Index was placed at $73.18/cwt, $0.15/cwt lower than the previous posting. Strong May export figures and USDA’s bullish pork cutout of $81.12/cwt, up $0.26/cwt were obviously factored in by the market. Packer offerings are expected to weaken later in the weak so holding sales now will most likely not be a good idea. Pricing some near term feed needs at this time is a good idea.

CORN on the Chicago Board of Trade (CBOT) finished down on Monday. Continued long liquidation, emerging suspicions that the U.S corn crop will be okay, and what looks like a decent growing season ahead are pressuring prices. The JULY’08 contract finished at $6.570/bu, off 23.0¢/bu and 59.4¢/bu lower than last Monday. The DEC’08 contract closed at $6.822/bu, off 27.0¢/bu and 64.8¢/bu lower than this time last week. Corn closed below $7.00/bu for the time in a month. USDA’s good-to-excellent condition of 64% (2% higher than expected) also pressured prices. Cash corn prices were steady at river ports on the Mississippi while cash corn bids in the U.S. Mid-Atlantic States were 27.0¢/bu– 32.0¢/bu lower in many locations. Patience in pricing anymore of the crop will most likely pay off if up to 60% of the ’08 crop has been priced.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were softer on Monday. The JULY’08 contract finished at $15.950/bu, down 35.4¢/bu from last Friday’s close but 6.0¢/bu higher than a week ago. The nearby July soybean contract closed at noon without any fanfare amid light trading activity. NOV’08 soybean futures closed at $15.590/bu, off 37.0¢/bu from Friday’s close and 2.0¢/bu cents lower than last Monday. Profit taking, spillover selling in corn, soyoil, and soymeal, good crop-development weather, and a firmer dollar weighed on prices. Cash soybeans along the river were steady to firm while those in the U.S. Mid-Atlantic States faltered between 37.0¢/bu -50.0¢/bu. New demand in China and lower freight rates were supportive. USDA put the U.S. soybean crop in good-to-excellent condition at 59% vs. expectations for 57%-58%. Soybeans inspectedfor- export were placed at 9.095 mi bu amid expectations for between 8-12 mi bu. It would be a good idea to hold off pricing any more of the ’08 crop at this time.

WHEAT futures in Chicago (CBOT) closed down on Monday. The JULY’08 contract closed at $8.100/bu, off 9.0¢/bu and 12.0¢/bu lower than last Monday. JULY’09 wheat futures closed off 14.6¢/bu at $8.860/bu and 16.0¢/bu lower than this time last week. Agriculture agents at this year’s NACAA conference in Greensboro, NC are reporting very good test weights and yields across the board. Exports and news that other world wheat growers have responded to recent low global stocks were bearish for prices. USDA placed the winter wheat crop at 62% harvested vs. the 70% 5-year average. Good-to-excellent crop ratings for the U.S. spring wheat crop were lowered 8% to 61% and provided some support. As stated here last week, hopefully the entire 2008 wheat crop has been sold by now.

5m Editor