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Weekly Roberts Report

by 5m Editor
3 December 2008, at 3:10am

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

Financial markets take another plunge generating fresh bearish momentum while commodities do likewise amid a strengthening U.S. dollar and plummeting oil prices plummet. In other news, Pilgrims Pride asked the courts for protection while it seeks to restructure. It is well known that they blame their woes on too much chicken on the market and high corn prices.

LEAN HOGS on the CME closed down on Monday. DEC’08 futures closed off $0.775/cwt at $58.725/cwt but $1.350/cwt higher than last Monday. The APR’09LH contract closed at $72.400/cwt; off $1.110/cwt but $0.80/cwt higher than a week ago. The JUNE’09LH contract lost $1.000/cwt to $82.050/cwt but $0.50/cwt higher than this time last week. Cash hog prices were lower a range of $0.75- $1.00/cwt as the premium of futures to the CME Lean Hog Index weighed on prices. The latest CME Lean Hog Index was placed at $52.09/cwt; up $0.50/cwt. USDA on Friday put the pork cutout at $58.48/cwt; down $0.37/cwt. Packers were still in a demand holding pattern. According to HedgersEdge.com, the average pork plant margin was placed at a positive $4.10/head; $2.85/head lower than a week ago. This was based on the average buy of $39.86/cwt vs. the average breakeven of $41.40/cwt. Consider holding hogs to heavier weights and buying short-term feed needs now.

CORN futures on the Chicago Board of Trade (CBOT) closed down to a 14-month low on Monday. The DEC’08 contract closed at $3.332/bu; down 16.25 ¢ /bu from Friday and 21.25 ¢ /bu lower than last week. MAR’09 corn futures closed at $3.492/bu; off 16.5 ¢ /bu and 21.75 ¢ /bu lower than this time last Monday. The absence of fresh fundamental news, speculative selling and good crop weather in South America boosting crop prospects proved bearish while U.S. export news was supportive. USDA placed corninspected- for-export at 32.6 mi bu vs. estimates for between 20-25 mi bu. China reported optimism for a record 525 mi tonne (20.7 bi bu) crop which is 5% higher than last years. Cash corn in the U.S. Midwest was steady as farmers continue to be slow sellers. Cash corn in the U.S. Mid-Atlantic States was steady to weaker with prices ranging from 2.0 ¢ /bu – 5.0 ¢ /bu lower in most places. Funds were net sellers of around 5,000 contracts. It should pay to store as the ’08 crop harvest comes to a close. A put option is not out of the question.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JAN’09 soybean contract closed at $8.460/bu; down 37.0 ¢ /bu and 38.0 ¢ /bu lower than this time last week. MAR’09 soybean futures closed at $8.542/bu; off 36.75 ¢ /bu and 37.5 ¢ /bu lower than last Monday. Speculative selling and good crop weather in South American growing regions pressured prices. Exports were somewhat supportive as USDA placed soybeans-inspected-for-export at 37.5 mi bu vs. estimates for 33-38 mi bu. Argentine soybean processors slowed their crush due to farmer hoarding amid hopes for better prices. China soybean processors halted operations as part of a government plan to support local farmers while stockpiling crops. U.S. Midwest cash soybeans were steady as farmers did not want to sell their crops at these prices. Cash soybeans in the U.S. Mid-Atlantic States were steady to weaker with prices ranging from 2.0 ¢ /bu – 8.0 ¢ /bu lower in most places. Basis was mostly higher around 5.0 ¢ /bu around the country. Storing beans will most likely pay now. A put option is not out of the question.

WHEAT futures in Chicago (CBOT) were off 6% on Monday amid financial market worries and expectations for large deliveries. The DEC’08 contract closed at $5.096/bu; down 32.75 ¢ /bu and 27.75 ¢ /bu lower than this time last week. JULY’09 wheat futures were off 33.0 ¢ /bu at $5.546/bu and 29.0 ¢ /bu lower than two weeks ago. Too much rain in Australia was supportive of global markets. USDA reported wheat-inspected-for-export at 19.8 mi bu vs. estimates for 15-27 mi bu. Iraq was still buying wheat on Monday, but not U.S. wheat. Reports showed it wanted Russian, German, or Canadian wheat, according to Chicago sources. China announced it would plant 5% more wheat next year while reports from the Ukraine show a reduction in wheat seedings. Hopefully 30%-40% of the new crop has been priced on previous advice. If global stocks continue to tighten prices may rebound.