Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 28 April 2010
clock icon 6 minute read

LEAN HOGS on the CME were down on Monday. The MAY’10LH contract closed down $0.575/cwt at $86.825/cwt but $0.300/cwt higher than last report. AUG’10LH futures finished at $84.975/cwt; off $1.100/cwt and $1.225/cwt lower than a week ago. Profit taking on strong gains in the April contract pressured prices. Futures soared reaching a 20-month high last week in reaction to a USDA report in March showing a smaller-than-expected US swine herd. Underlying fundamentals are supportive. Floor sources state that despite good cash numbers they believe that weakness in wholesale pork prices are signs that retailers might be backing off their buying at current prices. Cash prices were steady to weaker amid casual sales. The CME lean hog index was placed at $82.48/lb, up $0.74/lb from Friday and $4.76/lb higher than last report. According to HedgersEdge.com, the average pork plant margin was raised $7.90/hd from last report to a positive $12.15/hd. This was based on the average buy of $60.46/cwt vs. the average breakeven price of $64.95/cwt. Seasonal demand and lower hog supplies should keep prices in decent shape for 4 to 6 more weeks.

CORN futures on the Chicago Board of Trade (CBOT) were down Monday. The MAY’10 contract closed at $3.522/bu; down 0.75¢/bu but 4.75¢/bu higher than this time last week. DEC’10 corn futures closed down 1.75¢/bu at $3.764/bu and 1.75¢/bu lower than last report. Bearish fundamentals, lower soybean futures, and sharply lower wheat prices pressured corn. Corn prices were on the positive side until letting go of gains because of severe wheat losses. Floor sources they expected USDA to show corn-planting progress between 45-50 per cent complete. Late Monday USDA posted corn plantings at 50 per cent vs. a 5-year average of 22 per cent for this time of year. The record for this time of year is 52 per cent planted; which by the way does not necessarily equate to record yields. It provides for them but does not correlate as a sure thing. A few driving factors for such a planting rate are: a) very good planting weather, b) very warm soil temperatures from warmer-than-normal weather, and c) very large planting equipment. Weekend rains were in the forecast to help get the seedings started growing. Other factors lending support were higher crude oil, a strengthening DOW, and brisk sales. There were rumors on the floor today that China bought 4 to 5 cargoes of US corn. Time will tell if those rumors come true deal details are usually kept pretty close the vest until after delivery. Exports were neutral with USDA putting corn-inspected-for-export at 32.8 mi bu vs. expectations for 31.0-34.0 mi bu. Cash corn was steady to firm amid slow farmer selling. Farmers are still planting corn rather than selling. Funds sold about 2,000 lots taking them to even bear/bull positions. Large speculators (Goldman Sachs, etc.) cut bear positions in CBOT corn. Hopefully 70 per cent of the 2010 crop has been priced. If not, price on these bounces. There is still fundamental weakness in the corn market.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished down on Monday. The MAY’10 soybean contract closed at $9.986¢/bu; down 1.25¢/bu but 22.0¢/bu more than last Monday. NOV’10 futures closed at $9.774/bu off 1.5¢/bu but 21.5¢/bu higher than last report. Chart selling overpowered any strength soybeans had. Soybean futures could not find clear direction as fund buying was exhausted on technical profit taking eliminated any support futures might have had. On the other hand, seasonal buying patterns and carryover technical buying from overnight sessions led prices to almost 4-month highs on the opening. However, futures couldn’t find enough strength to overcome negative news of a record large harvest in South America and a looming US plantings record. Floor sources said that some traders were concerned about heavy rains forecast for next week stalling the record corn crop pace possibly leading to additional soybean acres being planted. USDA late Monday showed the US soybean crop 7 per cent planted vs. the 5 year average of 5 per cent for this time of year. Exports were neutral with USDA putting soybeans-inspected-for-export at 8.0 mi bu vs. expectations for 8.0-12.0 mi bu. Cash soybeans were steady-to-firm amid slow farmer selling. Funds drew near to even positions selling about 1,000 contracts. Large speculators reduced net bear positions in CBOT soybeans. If you haven’t priced 70 per cent of the 2010 crop these short-term rallies offer good opportunities to do so.

WHEAT futures in Chicago (CBOT) plunged on Monday. MAY’10 futures closed at $4.760/bu; down 17.25¢/bu from Friday but 8.4¢/bu higher than this time last week. The JULY’10 wheat contract closed at $4.880/bu; off 17.5¢/bu from Friday’s close but 8.75¢/bu higher than a week ago. Prices were pressured by poor exports, a good looking crop, profit taking on technical selling, and the lack of fundamental support on abundant world supplies and slow US export demand. On Monday USDA placed wheat-inspected-for-export at 9.85 mi bu vs. expectations for 15.0-18.0 mi bu. A strong US dollar continues to suppress exports. The US wheat crop is in good shape too. USDA late Monday placed wheat in good-to-excellent condition at 69 per cent vs. 45 per cent this time last year. There were a cluster of sell orders just at the $5.00/bu range. Those kicked in when futures reached for that price level and prices succumbed on a self-fulfilling prophecy. Funds sold short 5,000 contracts. Hopefully 70 per cent of the 2010 crop has been priced.

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