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Weekly Roberts Report

by 5m Editor
20 August 2008, at 1:26am

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

Headlines:

Last week’s USDA World Agriculture Supply Demand Estimate (WASDE) report was bearish for corn, neutral for soybeans, and bullish for wheat. However, corn futures were oversold so index funds took prices up … way up. Soybeans tagged along while wheat rode its own fundamentals. While the ups and downs of the volatility are dizzying, I’m sticking to my measuring objective of $4.81/bu for corn before it’s all said and done.

I’ve received numerous calls lately indicating that there are many readers who read my report in print media because they don’t use the internet. I appreciate the readership but want you to realize that the information is a week old when that happens. The corn market showed us last week that a lot can happen in a week. ☺ I finish writing my report on Monday night and email it out to a list serve, as well as the IT folks at Virginia Tech for posting on the web. If you would like a copy of my report faxed directly to you please call me at 804-733-2686 and ask to be put on a fax list for the report. If I am not here please ask the person who answers to put you on the Roberts Commodity Report fax list. We’ll gladly fax the report to you on Tuesday. I’d like to say I can mail you a copy but postage is kind of expensive these days on a non-profit, land-grant budget. Thanks for the readership.

LEAN HOGS on the CME closed up on Monday in light trading volume. The OCT’08LH contract closed at $75.800/cwt, up $0.250/cwt and $7.725/cwt higher than a week ago. DEC’08 futures closed up $0.150/cwt at $75.000/cwt. The FEB’09 contract closed up $0.275/cwt at $80.575/cwt. Short covering and October/December spreading were supportive. Cash hogs were noted higher by as much as $3.000/cwt in many places. USDA raised the pork cutout by $0.52/cwt to $94.41/cwt. The latest packer margin was raised $8.10/head over last Monday to $10.35/head based on the average buy of $63.96/cwt vs. an average breakeven of $67.99/cwt, according to HedgersEdge.com. It may be a good idea to push hogs off the feeding floor. Feed grain markets will remain very volatile.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The SEPT’08 contract finished at $5.530/bu, up 23.2¢/bu from Friday and 55.8¢/bu cents higher than a week ago. The DEC’08 contract closed at $5.726/bu, also up 23.2¢/bu from Friday and 55.6¢/bu higher than this time last week. Corn futures were supported by heavy speculative fund buying and strength in the soybean and wheat markets. This time last week corn futures were on the ropes but large speculators jumped in and traded the oversold technicals adding much to this synthetic price. Some support was seen in a weaker U.S. dollar amid ideas that the sell-off on Friday was a bit much. Several floor sources today said the general feeling in the corn market is that USDA has missed the crop-estimate mark and the 2008 Pro Farmer Midwest Crop Tour will reveal corn crop yield numbers closer to the 150 bu/acre mark. USDA placed the yield estimate near 155bu/ac in its last report. We’ll see. One thing for sure, this tremendous uncertainty adds fuel to an already very volatile corn market. Strong end user demand for corn at or near the $5.00/bu mark was supportive. USDA put corninspected- for-export at 36.7 mi bu vs. expectations for between 32-36 mi bu. Funds were net buyers of over 6,000 contracts on Monday after slashing net bull positions by 15,300 lots to 61,981 contracts as of August 12. Cash corn in the U.S. Midwest was steady to weak while cash bids for corn in the U.S. Mid-Atlantic States ranged 18.0¢/bu – 25.0¢/bu higher. Those who have up to 70% of the ’08 crop priced today are in good shape. Speculate with the rest.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were up on Monday. The AUG’08 contract finished at $12.790/bu, up 67.4¢/bu from Friday’s close and 64.0¢/bu higher than a week ago. NOV’08 soybean futures closed at $12.890/bu, up 70.0¢/bu and 93.0¢/bu higher than last Monday. The resumption of the Argentinean farmer strike, a weaker U.S. dollar, short-covering, and drier weather were supportive. USDA put soybeans-inspected-for-export at 4.5 mi bu vs. expectations for between 7.0-11.0 mi bu. China has suspended imports until after the Olympic Games. Funds bought right at 4,000 lots after cutting net bull positions by 11,600 lots to 38,822 contracts as of August 12. Cash soybeans in the U.S. Midwest were steady while cash beans in the U.S. Mid-Atlantic States were bid between up 55.0¢/bu -70.0¢/bu. Hopefully between 60%-70% of the 08 crop is sold at this time leaving the rest for speculation.

WHEAT futures in Chicago (CBOT) were up on Monday. The SEPT’08 contract closed at $8.596/bu, up 35.4¢/bu from Friday and 6.0¢/bu higher than a week ago. JULY’09 wheat futures closed up 35.0¢/bu at $9.336/bu; 65.0¢/bu higher than this time last week. Wheat futures rallied from the sell off last Friday. Rising corn and soybean prices, a weaker U.S. dollar, pretty good export numbers, adverse wheat growing weather in Argentina, and short-covering on chart buying were supportive. USDA reported wheat-inspected-for-export at 36.278 mi bu vs. expectations for between 28.33 mi bu. Funds decreased net bear positions by 2,707 lots resulting in total net short contract positions at 22,830 contracts. It might be a good idea to get another 10% of the ’09 crop priced bringing it up to 60% priced.


5m Editor