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Weekly Roberts Report

by 5m Editor
14 April 2010, at 5:38am

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

LEAN HOGS on the CME were down on Monday with the exception of the nearby April contract. APR’10LH futures finished at $76.375/cwt; up $0.150/cwt. The MAY’10LH contract closed off $0.775/cwt at $83.100/cwt. Cash hogs were steady-to-firm amid slow producer selling after last week’s rally in cash prices. Producers seem to be holding out for higher cash prices. Spreading was noted as traders sold June futures and bought April and December contracts. Sell orders were initiated when buyers left the action mid-session. According to a floor source traders were taking a “wait-and-see” approach wanting to see what will happen to the June and July contracts when the April expires. USDA put the average pork price at $79.51/cwt, up $0.20/cwt. The CME lean hog index was placed at $75.52/lb; up $0.63/lb. According to HedgersEdge.com, the average pork plant margin was raised $1.35/hd from last report to a positive $3.95/hd. This was based on the average buy of $55.49/cwt vs. the average breakeven price of $56.96/cwt.

CORN futures on the Chicago Board of Trade (CBOT) were up on Monday. The MAY’10 contract closed at $3.482; up 2.5¢/bu. DEC’10 corn futures closed up 2.0¢/bu at $3.806/bu. Short-covering, a weak US dollar, and talk of a Chinese corn-buying deal were supportive while exports and good corn-planting weather limited gains. Seedings were on yearly pace with USDA reporting late Monday a planting rate of 3 per cent compared to a 4 per cent average for this time of year. Floor sources said the market was expecting 5-6 per cent. USDA placed corn-inspected-for-export at 31.975 mi bu vs. trade estimates for 39-42 mi bu. Spreading was noted in May/July with a volume of 64,000 contracts. Even though funds bought about 6,000 lots they remained in a net-bear position. Fund activity is considered a measure of investment money flow in the market. Cash corn was steady to firm in the US Midwest and Mid-Atlantic states amid slow farmer selling. Hopefully 70 per cent of the 2010 crop has been priced.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday with deferreds past November ’10 futures finishing in negative territory. The MAY’10 soybean contract closed at $9.600/bu; up 7.75¢/bu. NOV’10 futures closed at $9.350/bu off 1.5¢/bu. Bull spreading in July/November futures, slow farmer selling in the US and South America, a weaker US dollar, and reports of new sales deals for old-crop soybeans with China were supportive. Weakness in the dollar supports commodity prices due to perceptions that it increases investor’s willingness to buy and makes US grain cost less in world markets. A bull spread refers to being long a nearby contract and short a deferred contract. It is called a bull spread because these spreads most often perform best in bullish, demand-driven markets. In cases where a commodity is in short supply, nearby contracts can go to significant premiums over the deferred and outer contracts may lag as they expect deliveries from future production. USDA placed soybeans-inspected-for-export at 13.398 mi bu compared to estimates for 17-20 mi bu. Favorable harvest weather in South America kept a lid on prices. Large funds turned net-bearish. Cash soybeans were steady to firm in the US Midwest and Mid-Atlantic States as farmers were busy getting fields ready for planting rather than selling. Hopefully you have priced 70 per cent of the 2010 crop.

WHEAT futures in Chicago (CBOT) were up on Monday. MAY’10 futures closed at $4.676/bu; even up 2.0¢/bu. The JULY’10 wheat contract closed at $4.804/bu; up 1.25¢/bu from Friday’s close. Wheat was supported by a weak US dollar, short covering, and spillover strength from corn and soybeans. Good growth and development weather limited gains. May/July spreading was noted to the tune of 55,000 lots. Exports were neutral with USDA placing wheat-inspected-for-export at 17.090 mi bu vs. expectations for 17-20 mi bu. Funds are still hugely bearish on the wheat market. Hopefully 70 per cent of the 2010 crop has been priced. If not, it may be wise to do before too much longer.