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Weekly Roberts Report

by 5m Editor
31 March 2010, at 5:06am

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

LEAN HOGS on the CME soared on Monday with all but the April contract limit up! APR’10LH futures finished at $71.875/cwt; up $2.200/cwt. Don’t get too excited though this was only $0.575/cwt higher than this time last week. The MAY’10LH contract closed up $3.000/cwt at $79.550/cwt but $0.30/cwt lower than a week ago. USDA’s hog report last Friday surprised the market by being surprisingly bullish. USDA’s numbers seem to be proving that producers continue to trim herd numbers after over 2 years of losses. USDA on Friday put the US hog herd down 3 per cent at 63.988 mi head. In addition, hogs-kept-for-breeding were down 4 per cent of this time last year. According to several floor sources those who had been bearish turned bullish as they grabbed profits near the close. Technical buying was sparked when both the April and the June contracts burst through their 100-day and 40-day moving averages. This kicked in buy orders placed just above the market and things took off from there and never looked back. Fundamentals are looking pretty good with grilling season about to kick off. USDA put the average pork price at $70.76/cwt; down $1.52/cwt. The CME lean hog index was placed at $70.21/lb, off $0.31/lb and $1.80/lb lower than last week at this time. According to HedgersEdge.com, the average pork plant margin was lowered $1.60/hd from last report to a positive $2.60/hd. This was based on the average buy of $49.52/cwt vs. the average breakeven price of $50.49/cwt.

CORN futures on the Chicago Board of Trade (CBOT) were up somewhat on Monday in light volume. The MAY’10 contract closed at $3.570; up 0.75¢/bu. DEC’10 corn futures closed up 1.00¢/bu at $3.864/bu. Both contracts finished about 13.0¢/bu lower than last report. A weaker dollar, higher crude oil prices and a rally in soybeans were supportive. Prospects for better planting weather limited gains. Exports were neutral with USDA putting corn-inspected-for-export at 37.854 mi bu vs. expectations for 35-38 mi bu. Floor sources said they were waiting on Wednesday’s planting intentions and quarterly stocks report before committing too much. Short-covering in the oversold market helped prices most of the day. Funds sold about 1,000 lots moving to a net-short position in CBOT corn. If USDA reports fewer than 88 mi acres in the planting intention report some upside potential exists for corn prices. If 90 mi acres are reported … look out for lower prices.

SOYBEAN futures on the Chicago Board of Trade (CBOT) gained on Monday. The MAY’10 soybean contract closed at $9.674/bu; up 15.5¢/bu but not quite even with last report. NOV’10 futures finished even with Friday’s close at $9.254/bu up 7.5¢/bu but not even with prices reported here two weeks ago. As with corn a weaker US dollar and higher crude oil prices were helpful. Also proving helpful was the threat of a producer strike in Argentina amid spreading labor protests. Bull spreading was a main feature as buyers shift their bids to other countries they know can get them the beans after they’ve been bought. Exports were not much support with USDA putting soybeans-inspected-for-export at 29.291 mi bu vs. estimates for 29.291-33 mi bu. Rainfall in Brazil slowing harvest there was supportive. It might be a good idea to price some of the 2010 crop if you are not already at 70 per cent sold in 2010 soybeans.

WHEAT futures in Chicago (CBOT) were steady-to-weak on Monday. MAY’10 futures closed at $4.664/bu; even with Friday’s close but 2.0¢/bu under last report. The JULY’10 wheat contract closed at $4.780/bu; also even with its last close but down 21.0¢/bu from last week. The weak US dollar and technical short-covering were supportive. USDA’s planting intentions report due out Wednesday is expected to show fewer acres planted to wheat. Exports were bearish with USDA reporting wheat-inspected-for-export at 14.776 mi bu vs. expectations for 16-20 mi bu. Russia continues to export acceptable wheat worldwide. Weather over the weekend helped spring growth in US wheat. Fundamentals for wheat haven’t changed much as there are still ample global stocks. Hopefully 70 per cent of the 2010 crop has been sold.