A firmer dollar and weakness in crude oil & gold spilled over to the grains on Monday. Weather continues to have a bearish influence over the markets as there is no threat of crop-killing frost for the near term.

LEAN HOGS on the CME finished down again on Monday. OCT’09LH futures finished down $0.65/cwt at $50.150/cwt and $0.800/cwt lower than last report. The DEC’09LH contract closed down $0.925/cwt at $49.375/cwt but $0.375/cwt higher than a week ago. Carry over technical selling was noted from Friday’s steep sell-off. Plenty of retail product, weak cash hogs, a general sell off in commodities, and concern this coming Friday’s USDA Hogs and Pigs report will show producers only moderately cutting the US swine herd back pressured prices. Noting high processing levels last week and no signs of slowing down several floor sources said today that the US hog herd has to be cut severely to bring back higher prices. Last Friday USDA put the average pork price at $56.79/cwt; down $0.25/cwt. The latest CME lean hog index was placed at 52.59 ¢/lb; up 0.40. According to HedgersEdge.com the average pork plant margin was raised $4.65/head to $7.05/head. This was based on the average buy of $37.52/cwt vs. the average breakeven price of $40.15/cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished off on Monday. DEC’09 corn futures finished at $3.160/bu; down 2.0¢/bu and 2.0¢/bu from last report. A stronger US dollar is seen as negative for exports while weaker crude oil prices signal a slump in the DOW. USDA put corn-inspected-for-export at 33.1 mi bu vs. estimates for between 35-40 mi bu. The market has taken back gains made last week. China announced estimates for a bumper corn crop this fall despite drought and early frost in most major growing areas. Cash corn in the US Midwest was steady to weaker under active farmer selling as old corn was cleaned out of bins. The CFTC reported large non-commercials cutting net short positions in corn futures by 29,400 lots to 9,801 contracts. Expect fundamental weakness in corn prices through harvest unless a significant emotional event occurs.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The NOV’09 contract closed at $9.134/bu; off 27.5¢/bu but 4.5¢/bu over last report. As frost fears are pushed further off the weather premium is fast disappearing. Firmer US dollar prices and lower crude oil are also putting pressure on prices. In other bearish news only 205,000 tonnes (9.84 mi bu) of soybeans were inspected for exports vs. expectations for between 12.0 – 18.0 mi bu. China did not order any US soybeans last week. Large non-commercials were net bullish in CBOT soybeans at 16,800 lots buying over 4,600 contracts. Up to 70-80 per cent of the new crop should have been priced by now.

WHEAT futures in Chicago (CBOT) were down on Monday with the exception of the July 2010 contract. The JULY’10 wheat contract closed at $4.994/bu; off 2.0¢/bu but 2.5¢/bu cents higher than last Monday. Weaker corn and soybean markets, a firmer dollar, and lower crude oil prices pressured prices. Exports were supportive with USDA placing wheat-inspected-for-export at 23.2 mi bu vs. expectations for between 14.0-19.0 mi bu. Drought in New South Wales supported prices somewhat. Large non-commercial speculators cut net bear positions to 64,939 lots; down nearly 4,300 contracts. Hopefully 50 per cent of next year’s crop has been sold.