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Weekly Roberts Report

by 5m Editor
5 November 2008, at 6:47am

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

Grain and wheat markets may be showing a bottom.

LEAN HOGS on the CME closed mixed on Monday with nearbys off while deferreds gained. DEC’08 futures closed off $0.400/cwt at $54.400/cwt and $4.150/cwt lower than a week ago. The APR’09LH contract closed at $70.150/cwt; even with Friday’s close but down $0.30/cwt from last Monday. The JUNE’09LH contract gained $0.25/cwt to $80.00/cwt. December/February spreading limited losses in the December contract while lower cash hog bids pressured prices. Slowing sales amid an abundant supply isn’t helping. USDA placed the Pork Carcass Cutout at $62.17/cwt; off $0.20/cwt and the lowest it’s been since last April. The latest CME Lean Hog index was placed at $58.90/cwt, off $0.45/cwt and $7.07/cwt lower than this time last week. According to HedgersEdge.com, the average pork plant margin was placed at a positive $9.90/head; $2.35/head lower than this time last week. This was based on the average buy of $40.40/cwt vs. the average breakeven of $44.13/cwt. It might be a very good idea to price up to 40%-50% of next year’s feed needs at this time. Hold hog sales if possible.

CORN futures on the Chicago Board of Trade (CBOT) were up on Monday. The DEC’08 contract closed at $4.030/bu; up 1.5 ¢ /bu from Friday and 17.75 ¢ /bu higher than a week ago. MAR’09 corn futures closed at $4.206/bu; up 1.5 ¢ /bu but 15.75 ¢ /bu lower than this time last Monday. Short covering by funds advanced prices while lower crude oil and lower than expected exports limited gains. The CFTC’s Commitment of Traders report from last Friday showed funds increasing short positions to net-bear positions for the first time since January 2006. Large speculators increased net-bear positions by 12,500 lots to 19,484 contracts. USDA placed corn-inspected-for-export at 17.245 mi bu vs. expectations for between 25-29 mi bu. In other news, ethanol processor VeraSun Energy Corp filed for bankruptcy protection on Friday. The market has been aware of financial troubles for that company ahead of that announcement so little fundamental impact is expected. More ethanol plants following suit could impact prices later on. Ethanol futures ended lower. Cash corn in the U.S. Midwest was higher amid slow farmer selling. Even lower barge rates weren’t attracting too much business. Cash corn in the U.S. Mid- Atlantic States was up slightly ranging from 1.0 ¢ /bu – 2.0 ¢ /bu higher in most places. It will most likely pay to store what’s not priced.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up slightly on Monday. NOV’08 soybean futures closed at $9.282/bu; up 3.0 ¢ /bu and 35.25 ¢ /bu higher than a week ago. The JAN’09 soybean contract closed at $9.374/bu; up 4.4 ¢ /bu and 40.0 ¢ /bu higher than last Monday. Good export numbers, harvest-delaying weather, and good cash markets were supportive. USDA placed soybeansinspected- for-export at 49.399 mi bu vs. expectations for between 35-40 mi bu. The CFTC’s Commitment of Traders report had large speculators flipping back to net bull positions by 7,641 lots. Large index funds were net buyers of 2,000 contracts. Cash prices in the U.S. Mid-Atlantic states mimicked corn going slightly higher amid slow farmer selling. Wait to price soybeans. Consider storing.

WHEAT futures in Chicago (CBOT) closed up on Monday. The DEC’08 contract closed at $5.620/bu, up 25.75 ¢ /bu and 32.75 ¢ /bu higher than a week ago. JULY’09 wheat futures were up 25.75 ¢ /bu at $6.096/bu and 34.5 ¢ /bu higher than this time last week. Chart based selling and short covering were supportive. Exports were disappointing with USDA reporting wheat-inspected-for-export at 13.243 mi by vs. expectations for between 19-23 mi bu. Rains in Australia were helpful to that country’s crop. Funds bought net + 3,000 contracts. The CFTC Commitment of Traders report had large speculators cutting net bear positions by 1,800 lots to 38,894 contracts. Wheat in Kansas City and Minneapolis were gainers. It might be a good idea to price another 5%-10% of the 2009 crop getting to 30%-40% priced.


5m Editor