Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 26 May 2010
clock icon 5 minute read

LEAN HOGS on the CME were gainers on Monday. The JUNE’10LH contract closed up $0.425/cwt at $81.875/cwt and $0.375/cwt over last report. AUG’10LH futures finished at $82.650/cwt; up $0.325/cwt and $1.150/cwt higher than a week ago. Bull spreading was noted. Spreads involve trading two or more contracts at the same time while capitalizing on the price differences between them. Hogs started lower but closed on the uptick in late buying encouraged by USDA’s Cold Storage report of last Friday showing US pork supplies at their lowest point in six years. The USDA report showed there were 482.5 mi lbs of pork in US warehouses as of April 30; down 21 per cent from a year ago. US pork production was down 4.4 per cent for 2010 because of lower herd numbers on farms. Smithfield Foods Inc. the largest US hog producers said last week it had no plans to rebuild its hog herd to previous levels. Expectations for higher export possibilities were also supportive. Despite this higher finish prices should go lower after the seasonal buying for the holiday. Packers mostly bought all they needed late last week and today. USDA put the average pork price at $87.53/cwt; off $0.23/cwt and $4.28/cwt lower than this time last Monday. The CME lean hog index was placed at $86.38/lb; off $0.49/lb and $1.80/lb lower than last report. According to HedgersEdge.com, the average pork plant margin was lowered $0.75/hd from last report to a positive $6.20/hd. This was based on the average buy of $60.62/cwt vs. the average breakeven price of $62.90/cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The JULY’10 contract closed at $3.710/bu; up 2.0¢/bu and 1.5¢/bu over last week at this time. DEC’10 corn futures closed up 3.75¢/bu at $3.890/bu and 12.75¢/bu lower than last report. Good Chinese demand continued to buoy corn futures while prospects for good weather, a strengthening dollar, jitters over the worsening European Union economic situation, and bear spreading limited gains. Good weather helped corn seedings as late Monday USDA placed the US corn crop at 93 per cent planted vs. the 5-year average of 89 per cent. USDA placed corn-inspected-for-export at 39.970 mi bu. vs. estimates for 34-38 mi bu. Cash corn was steady to firm due to slow farmer selling. Funds bought 5,000 lots while spreading an additional 3,000 contracts in December/July. Large funds continue to narrow bull positions to 28,453 lots. Overhead resistance is placed at $3.73 while support is at $3.6525/bu. Cash corn was steady-to-firm amid slow farmer selling. Up to 70 per cent of the 2010 corn crop has been priced on previous advice. If not, it might be a good idea to get there on these upticks.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were up on Monday with the exception of the nearby July contract. The JULY’10 soybean contract closed at $9.404/bu; down 0.5¢/bu and 0.75¢/bu lower than a week ago. NOV’10 futures closed at $9.154/bu up 8.0¢/bu but 1.0¢/bu lower than last report. Unwinding of bull-spreads limited July and some other nearbys while supporting deferreds. Rumors and talk that buyers will switch from South American soybeans to US beans was supportive but will not support the market long term unless more US exports materialize. Argentine farmers are hoarding millions of tonnes of soybeans as they hold out for higher prices and a weaker peso. This is forcing Argentinean crushers to pay a premium to get hold of beans in a situation that may last for months. Additional support came from reluctant farmer selling resulting in firm cash markets. BUNGE in the port of Rosario has reportedly been running at 60 per cent of capacity. Lower-than-expected exports, a stronger US dollar, and good cropping weather hindered gains. USDA put soybeans-inspected-for-export at 3.901 mi bu vs. expectations for 7-10 mi bu. USDA on Monday put US soybean seedings at 53 per cent vs. the 5-year average of 58 per cent for this time of year. Several floor traders said pit traders expected USDA to place planting progress at 56 per cent. This news might help prices somewhat for the rest of the week. Funds turned net-bears holding 10,684 short positions. Hopefully 70 per cent of the crop has been sold on previous advice.

WHEAT futures in Chicago (CBOT) were down on Monday. The JULY’10 wheat contract closed at $4.674/bu; off 4.5¢/bu and 1.75¢/bu lower than a week ago. JULY’11 futures finished down 2.75¢/bu at $5.774/bu; 3.75 ¢/bu lower than this time last week. Exports and some short-covering were supportive while large world supplies and a stronger US dollar continue to be burdensome on wheat prices. USDA on Monday placed wheat-inspected-for-export at 20.308 mi bu vs. expectations for 13-17 mi bu. Funds grew new-bear positions to 56,650 lots amid light selling action. Reports from Europe and France indicate hot, dry weather is threatening yields there. Late Monday USDA gave the US winter wheat crop a 66 per cent good-to-excellent condition rating. Hopefully 70 per cent of the 2010 crop was sold on previous advice allowing room to speculate with the rest of the crop. It also may be a very good idea to price up to 30 per cent of the 2011 crop.

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