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Weekly Roberts Report

by 5m Editor
23 June 2010, at 5:00am

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

LEAN HOGS on the CME closed up on Monday. The JULY’10LH contract closed up $1.125/cwt at $82.000/cwt and. AUG’10LH futures finished at $84.350/cwt; up $1.700/cwt. Higher cash pork prices, lower corn prices, the monetary policy change for the Chinese yuan, and a higher DOW Jones were supportive. Technical buying was triggered as futures extended gains. Floor sources believed that the better DOW performance had more to do with higher pork prices than other factors today. They said that better performing stock markets should support US and overseas demand for the more expensive pork products. Spreading into the August out of both July and October futures was noted. Spreading involves trading two or more months at the same time while trying to capitalize on the price differences between them. USDA put the average pork price at $83.74/cwt; up $0.96/cwt from Friday and $0.25/cwt lower than a week ago. The CME lean hog index was placed at 79.10; up 0.73 and 1.17 over last report.

According to HedgersEdge.com, the average pork plant margin was lowered $4.55/hd from last report to a positive $5.35/hd. This was based on the average buy of $58.17/cwt vs. the average breakeven price of $60.09cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished down on Monday. The JULY’10 contract closed at $3.550/bu; down 5.75¢/bu. DEC’10 corn futures closed off 5.75¢/bu at $3.746/bu. Over bought conditions, a stronger US dollar, and brisk farmer selling pressured prices. There was no fresh fundamental news. Cash corn prices held steady where elevators needed the commodity. That won’t last long at the pace corn is leaving farm grain bins. Corn prices tended bullish on the opening amid news that China would let its currency float. However, buying enthusiasm waned quickly on ample supply side economics. Technical trading pushed declines lower toward the end of the session. Speculative funds sold nearly 14,000 contracts. Fund activity is a measure of investment money flow into or out of the market. Exports were bearish with USDA putting corn-inspected-for-export at 24.488 mi bu vs. expectations for 35-38 mi bu. Hopefully the rest of the 2010 crop and up to 20 per cent of the 2011 crop were priced on advice from last report.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The JULY’10 soybean contract closed at $9.632/bu; up 2.25¢/bu. SEP’10 soybean futures finished up 6.25¢/bu at $9.440/bu. NOV’10 futures closed at $9.390/bu, up 8.5¢/bu. Excess rain on some areas is slowing planting and worries over hot dry weather in the Mississippi River Delta area added support on fears that the recently planted crop is suffering. USDA late Monday put the US soybean crop at 93 per cent planted and in 69 per cent good-to-excellent shape vs. a 73 per cent rating this time last week. The bearish influence of a stronger dollar was offset by news that China would have more buying power due to recent moves in its financial markets and decisions by their government to let the Chinese yuan float on market demand. Even though China confirmed a buy of 120,000 tonnes (4.41 mi bu) of old-crop US soybeans it had little effect on the market. According to several floor sources this deal had been expected for several weeks and was factored into prices already. USDA put soybeans-inspected-for-export at 7.151 mi bu vs. expectations for 7-9 mi bu. Cash soybeans were steady to firm amid slow farmer selling. Funds bought over 4,000 lots of soybeans. Fund activity is a measure of investment money flow into or out of the market. Selling takes money out of the market and buying puts money in. It would be a good idea to sell another 10 per cent of the 2010 soybean crop taking you to 80 per cent sold.

WHEAT futures in Chicago (CBOT) finished lower on Monday with the exception of the July contract. The JULY’10 wheat contract closed at $4.620/bu; up 0.25¢/bu. JULY’11 futures finished down 1.25¢/bu at $5.5684/bu. Futures traded both sides until near the close. Traders noted that harvest-weather forecasts in Canada were the biggest price influencers on Monday. It is very wet there. Wheat supplies in the US continue to come on line and influence supply amid very good harvest conditions. CBOT wheat was unable to find gains as wheat on the MGE and KCBT exchanges found some, even though they were small. Funds sold an estimated 2,000 contracts in Chicago. Exports had a bearish influence as Egypt and Saudi Arabia turned up their noses at sizable tenders for US wheat this past weekend. Saudi Arabia booked 990,000 tonnes (36.38 mi bu) of German and Canadian wheat while Egypt bought 120,000 tonnes (4.41 mi bu) of Russian and Kazakh wheat. USDA put wheat-inspected-for-export at 11.465 mi bu vs. expectations for 12-14 mi bu. Last week Canada was seen as having production problems. They scored big this week on a wheat sale to Saudi Arabia with an effective price of $228.00/tonne ($6.205/bu). Hopefully 70 per cent of the 2010 crop and up to 40 per cent of the 2011 crop were priced last week.

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