Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 30 June 2010
clock icon 5 minute read

LEAN HOGS on the CME closed down on Monday. The JULY’10LH contract closed off $1.200/cwt at $79.925/cwt and $2.08/cwt lower than last week at this time. AUG’10LH futures finished at $82.175/cwt; down $1.750/cwt and $2.18/cwt lower than last report. Packer demand is weak since next week is a short week. Packers are said to have plenty of supplies on hand to meet sales objectives next week. However, some plants in spotty areas of the country did bid hogs to $1/cwt over last week. Technical selling and the weakened economy also pressured prices according to two Chicago floor sources. Friday’s USDA hogs and pigs report is seen as neutral to barely bullish for hog futures. USDA reported last Friday that June 1 total hog supply was 96 per cent of last year, the breeding herd was 97 per cent of last year, and market hog supply was 96 per cent of last year. The market expected 3-5 per cent reductions and they were right. The latest CME lean hog index was placed at 81.15; up 0.18 but 2.05 higher than this time last week. USDA put the average pork price at $83.85/cwt; down $0.41/cwt from Friday but $0.11/cwt higher than last report. According to HedgersEdge.com, the average pork plant margin was lowered $2.90/hd from last report to a positive $2.45/hd. This was based on the average buy of $59.27/cwt vs. the average breakeven price of $60.17cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed off on Monday for the sixth time in a row. The JULY’10 contract closed at $3.336/bu; down 6.75¢/bu and 21.0¢/bu lower than a week ago. DEC’10 corn futures closed off 7.75¢/bu at $3.526/bu and 22.0¢/bu lower than last report. Corn tumbled to an 8-month low on technical signs below $3.35/bu. Further bear momentum, improved crop weather seen as fueling potential for another record crop, a steady-to-firming US dollar, and weak outside markets in crude oil pressured prices. USDA will release its acreage report June 30 and its World Agriculture Supply Demand Estimates on July 9. On average analysts expect corn plantings to come in around 89.0-89.4 mi acres. I think it will be closer to 89.5 mi acres. Through the weekend 687 July $3.40/bu corn options were exercised increasing pressure on corn futures prices. Conflicting reports regarding Chinese imports of US corn have surfaced. The market pretty much ignored this. USDA put corn-inspected-for-export at 35.393 mi bu vs. expectations for 31-34 mi bu. Funds sold an estimated 12,000 contracts. Hopefully the rest of the 2010 crop and up to 20 per cent of the 2011 crop were priced on advice from last report. If not, it would be advisable to sell the rest of the 2010 corn crop, any unsold 2009 crop, and hold off on selling any more of the 2011 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday with the exception of the July and August contracts. The JULY’10 soybean contract closed at $9.550/bu; off 2.0¢/bu and 8.0¢/bu lower than last week at this time. SEP’10 soybean futures finished up 5.5¢/bu at $9.264/bu but 18.0¢/bu lower than a week ago. NOV’10 futures closed at $9.184/bu, up 6.5¢/bu but 21.0¢/bu lower than last report. Slow farmer selling, firm cash bids, and news that China will increase imports were supportive while improved crop weather and spillover from wheat and corn kept the pressure on further gains. USDA placed soybeans-inspected-for-export at 4.556 mi bu vs. expectations for 4-8 mi bu. Unwinding bull spreads out of July and August positions pushed those contracts to negative numbers. Funds bought 1,000 lots. Hopefully 80 per cent of the 2010 crop has been sold.

WHEAT futures in Chicago (CBOT) closed down on Monday. The JULY’10 wheat contract closed at $4.494/bu; down 6.75¢/bu and 13.0¢/bu lower than a week ago. JULY’11 futures finished down 3.0¢/bu at $5.553/bu and were 2.0¢/bu lower than last report. Harvest pressure showing a US bumper crop is in the making, follow-through technical selling, a firm US dollar, and ample global stocks weighed on prices. Russian and European harvests also pressured prices. Exports were supportive as of June 24 with USDA putting wheat-inspected-for-export at 16.011 mi bu vs. expectations for 12-15 mi bu. It would be a good idea to sell the rest of the 2010 crop having sold 70 per cent on previous advice. It would also be prudent to sell another 10 per cent of the 2011 crop taking you to 50 per cent priced.

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