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Weekly Roberts Report

by 5m Editor
17 December 2008, at 6:19am

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

Thank you to all the faithful readers and everyone that submits questions, concerns, and comments. Due to the holidays the Roberts Agricultural Commodity report will not be posted for the weeks of December 22 and December 29. The report will resume posting on January 5, 2009. I hope that your holidays are all that you hope they could be.
- Mike Roberts

LEAN HOGS on the CME finished up on Monday. FEB’09 futures closed up $0.30/cwt at $62.575/cwt. The APR’09LH contract closed at $68.450/cwt; up $0.675/cwt but $1.475/cwt lower than a week ago. The JUNE’09LH contract gained $0.475/cwt to $78.000/cwt but $0.975/cwt lower than this time last week. A weaker U.S. dollar, higher cattle prices on the open-outcry floor, good exports numbers for October, cold weather hampering hog sales, short covering, and brisk commercial buying were supportive. Futures trading volume was light as traders look for the seasonal fall in demand after Christmas. USDA put the pork cutout at $60.04/cwt on Friday, off $0.23/cwt. The latest CME Lean Hog Index was placed at $56.45/cwt, off $0.13/cwt but $0.93/cwt higher than this time last week. According to HedgersEdge.com, the average pork plant margin was placed at a positive $6.65/head; $1.95/head lower than a week ago. This was based on the average buy of $40.07/cwt vs. the average breakeven of $42.55/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The DEC’08 contract has expired. MAR’09 corn futures closed at $3.752/bu; up 1.75 ¢ /bu and 45.25 ¢ /bu (13.7%) higher than last Monday. A weaker U.S. dollar and bull spreading in corn/soybeans were supportive. One report stated that some analysts are expecting corn acreage to fall by as much as 3.6 mi acres in 2009. We’ll see. If input costs are high and corn prices stay relatively non-profitable at these levels it just may happen. Producers try to go where the money is … just like anyone else. Other support for corn came from exports. USDA reported on Monday that 29.3 mi bu had been inspected for export vs. estimates for between 22.0-26.0 mi bu. China released news that it would be “perfecting” reserves of oil, coal, and grain. What does that mean for the U.S. corn market? I guess we’ll see. Weather in South America was favorable for crops there and is expected to remain so for the next 10 days. Farmers are waiting on prices to rise further as they hold onto stocks. Cash corn prices in the U.S. Mid-Atlantic states were 22.0 ¢ /bu – 29.0 ¢ /bu higher on Monday. Large speculators decreased net bear positions in CBOT corn as funds bought over 4,000 lots. It should still pay to store. A put option is still 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; off 8.0 ¢ /bu but 25.75 ¢ /bu higher than this time last week. MAR’09 soybean futures closed at $8.494/bu; down 6.75 ¢ /bu but 24.0 ¢ /bu higher than last Monday. Lower-thanexpected exports, slipping crude oil prices and bear corn/soybean spreads weighed on the market. Analysts estimates that 2009 soybean acres would increase 5.56 mi ac to 81.455 mi acres weighed on prices. USDA placed soybeans-inspected-for-export at 34.4 mi bu vs. expectations for between 35.0 – 40 mi bu. Good soybean growing weather in Argentina didn’t help either. Cash soybeans in the U.S. Midwest were steady amid slow producer selling. Cash prices in the U.S. Mid-Atlantic States were weaker 3.0 ¢ /bu – 5.0 ¢ /bu as end-user needs were met last week. Large speculator bull positions were relatively unchanged with funds selling just fewer than 1,000 contracts. Consider holding beans not sold last week on up-ticks. A put option is still not out of the question.

WHEAT futures in Chicago (CBOT) were up on Monday. The DEC’08 contract expired. The MAR’-09 contract closed at $5.200/bu, up 7.0 ¢ /bu. JULY’09 wheat futures were up 6.75 ¢ /bu at $5.454/bu and 28.75 ¢ /bu higher than last week. Chart-based buying in short-covering was the theme. A weaker U.S. dollar helped U.S. wheat creating pricing opportunities for importers from other countries. Winter weather was of some concern in the U.S. Plains. Lower crude oil prices pressured gains late in the day. A leading analyst expects U.S. wheat acres to be reduced by as much as 2.1 mi acres. Exports were brisk with Iraq tendering for 50,000 tonnes (1.84 mi bu) while Taiwan tendered for 65,020 tonnes (2.1 mi bu) of U.S. wheat. Wet weather in Australia was not good for any wheat left behind to dry out. Large speculators increased net bear positions while funds bought 2,000 lots. Hold off on pricing any more wheat until later.