Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 9 June 2010
clock icon 5 minute read

LEAN HOGS on the CME were off on Monday. The JUNE’10LH contract closed down $1.275/cwt at $77.775/cwt. AUG’10LH futures finished at $78.800/cwt; up $1.975/cwt. Weak chart signs amid active fund selling pressured prices. Funds abandoned live hogs on long-liquidating trades. However, some floor sources said that fund traders started buying on the oversold status near the close. This may contribute some strength on Tuesday. They went on to say that any buyer right now is a little bit nervous about overexposure in light of the wavering stock market. Slow pork movement on Monday indicates this week might be a slow one for pork prices. USDA put the average pork price at $84.78/cwt; off $0.59/cwt. The CME lean hog index was placed at $80.07/lb; off $0.04/lb. According to HedgersEdge.com, the average pork plant margin was raised $4.80/hd from last report to a positive $11.00/hd. This was based on the average buy of $56.80/cwt vs. the average breakeven price of $60.86/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’10 contract closed at $3.356/bu; off 4.25¢/bu. DEC’10 corn futures closed down 4.5¢/bu at $3.550/bu. The struggling European Union economy, fund selling, good growing weather, and weak exports weighed on prices. Fears over European Union economic woes kept traders from the bull pits as evidenced by follow-through selling from last Friday by large funds. Funds sold over 8,000 contracts as investment money left the corn market. USDA reported the US corn crop late Monday at 76 per cent good-to-excellent condition. According to several floor sources pit traders expected a rating of 77 per cent. Excellent growing conditions are raising the potential for record yields. Also on Monday USDA placed corn-inspected-for-export at 31.742 mi bu vs. expectations for 36-40 mi bu. The absence of any fresh fundamental news is keeping buyers on the bench. Basis was firm due to very slow farmer selling on falling prices. USDA will issue its World Agriculture Supply Demand Estimates (WASDE) report this Thursday. Hopefully 70 per cent of the 2010 corn crop has been priced on previous advice.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were mixed on Monday. The JULY’10 soybean contract closed at $9.350/bu; even with last Friday’s close. SEP’10 soybean futures were down 1.5¢/bu at $9.042/bu while NOV’10 futures closed at $9.000/bu also even with last session’s closing price. Tight cash markets limited the downside as farmers held onto supplies waiting for higher prices. USDA reported the US soybean crop 84 per cent planted, right on the money with the 5-year average. This was a little behind what pit traders expected. Also on Monday USDA put out their first soybean crop rating. The crop was rated at 75 per cent in good-to-excellent shape vs. expectations for 70 per cent. The market had a hard time putting anything together because of limited or no fresh news and the economic woes in Europe. Bearish fundamentals are still keeping the lid on prices as well. Cash soybean prices firmed trying to entice farmer selling. Early in the session some bull spreading was noted in nearby contracts until late position-evening smoothed things over. The market is in a “wait-and-see” mood right now and prices probably won’t see too much movement until something like harsh weather or other fundamental news comes along. USDA put soybeans-inspected-for-export at 4.341 mi bu vs. expectations for 7-10 mi bu. Hopefully 70 per cent of the crop has been sold on previous advice.

WHEAT futures in Chicago (CBOT) finished down on Monday. The JULY’10 wheat contract closed at $4.322/bu; off 3.5¢/bu. JULY’11 futures finished down 3.0¢/bu at $5.496/bu. Harvest continues to pressure prices weaker on already burdensome global stocks. Recent rains in the US Plains have stopped the combines marching north but reports from the field indicate they will resume with vigor once the rain lets up. Exports were steady with USDA putting wheat-inspected-for-export at 14.379 mi bu vs. expectations for 13-17 mi bu. Argentina reports good prospects for 2010/11 wheat production to 11 mi tonnes (404.2 mi bu), up from 7.5 mi tonnes (275.6 mi bu) last year. Some short-covering can be expected ahead of the WASDE report due out this Thursday. Funds, now in heavy net-bear positions at 67,865 short-lots, may provide some temporary upward momentum this week amid short covering. Late Monday USDA placed the US wheat crop at 66 per cent in good-to-excellent condition vs. 65 per cent last week. The good-to-excellent crop rating for the US spring wheat crop was placed at 85 per cent. Hopefully 70 per cent of the 2010 crop has been sold. It also may be a very good idea to price up to 40 per cent of the 2011 crop.

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