ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

Weekly Roberts Report

by 5m Editor
10 December 2008, at 4:24am

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

LEAN HOGS on the CME finished mixed on Monday. DEC’08 futures closed off $0.475/cwt at $56.975/cwt and $1.75/cwt lower than last Monday. The APR’09LH contract closed at $69.925/cwt; up $0.550/cwt but $2.475/cwt lower than a week ago. The JUNE’09LH contract gained $0.675/cwt to $78.975/cwt but $3.075/cwt lower than this time last week. The December and February contracts were pressured by spreading; buying February/selling December and buying April/selling February. Even though the December lost ground it held its premium to the CME Lean Hog Index going into Friday’s expiry date. The latest CME Lean Hog Index was placed at $55.52/cwt; up $0.25/cwt. Cash hogs were steady but sources said this was due mainly to seasonality of demand ahead of Christmas dinners. Deferreds rallied on hopeful economic indicators, not much else. USDA on Friday put the pork cutout at $61.77/cwt; up $1.53/cwt. According to HedgersEdge.com, the average pork plant margin was placed at a positive $8.60/head; $4.50/head higher than a week ago. This was based on the average buy of $40.61/cwt vs. the average breakeven of $43.83/cwt. Sell hogs as soon as they are ready to take advantage of seasonal prices. Hopefully some corn inputs were priced last week.

CORN futures on the Chicago Board of Trade (CBOT) closed up ~ 7 per cent amid technical buying on Monday after easing back from below the $2.934/bu mark posted in the December contract last Friday. On Monday the DEC’08 contract closed at $3.142/bu; up 20.75 ¢ /bu from Friday but 19.0 ¢ /bu lower than last week at this time. MAR’09 corn futures closed at $3.300/bu; up 20.75 ¢ /bu but 19.25 ¢ /bu lower than last Monday. Good news in the U.S. economy regarding bailouts and government intervention buoyed commodities by way of outside markets. Exports were disappointing as USDA placed corn-inspectedfor- export at 21.340 mi bu vs. estimates for between 27-30 mi bu. China announced a plan to keep its annual economy growth rate at an even 8 per cent. This is seen as good news for U.S. corn and soybean exports. In news holding back gains Argentina and Brazilian corn growers got some much needed rain boosting crop prospects. Funds bought 5,000 contracts. Cash corn was firmer in the U.S. Midwest while weaker in the U.S. Mid-Atlantic states ranging 25.0 ¢ /bu– 30.0 ¢ /bu lower in many areas. It should still pay to store waiting to see if support in deferreds gain ground. A put option is still not out of the question.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JAN’09 soybean contract closed at $8.204/bu; up 37.0 ¢ /bu but 25.75 ¢ /bu lower than this time last week. MAR’09 soybean futures closed at $8.254/bu; up 38.25 ¢ /bu but 28.75 ¢ /bu lower than last Monday. The price rally came on technical buying via short covering and spillover from outside markets amid anticipation of what the President-Elect’s market intervention policies will look like. Good soybean-growing-weather in South America weighed on prices. USDA placed soybeans-inspected-for-export at 40.633 mi bu vs. expectations for between 35-40 mi bu. China was responsible for buying 29.7 mi of those bushels due to new economic strategies in that country. Cash soybeans in the U.S. Midwest were steady-to-weaker as farmers sold soybeans in a panic after last Friday’s collapse in prices. However, buyers in the U.S. Mid- Atlantic states were betting prices will go lower as cash bids were noted much weaker ranging 27.0 ¢ /bu – 40.0 ¢ /bu lower. Large speculators decreased net-bull positions in CBOT beans as funds were net buyers of over 3,000 contracts. Consider selling stored beans on these up-ticks. A put option is still not out of the question.

WHEAT futures in Chicago (CBOT) were up on Monday even though global fundamentals remain bearish. The DEC’08 contract closed at $4.730/bu; up 15.25 ¢ /bu but 36.75 ¢ /bu lower than this time last week. JULY’09 wheat futures were up 15.25 ¢ /bu at $5.166/bu but 38.0 ¢ /bu lower than two weeks ago. Gains in other commodities, higher hopes for the U.S. economy, and Australian weather concerns were supportive. Heavy global stocks, lower-than-expected exports, and acceptable weather in the U.S. Plains weighed on prices. USDA placed wheat-inspected-for-export at 12.577 mi bu vs. 15-20 mi bu. The Ukrainian and Argentinean wheat harvests are reported shorter than expected. Large speculators increased net bear positions while funds bought 2,000 lots on the day. How much this market will rebound will depend upon outside market strength. Hopefully 30 per cent-40 per cent of the new crop has been priced on previous advice. It is a good idea to price another 10 per cent of the ’09 crop on these upticks.