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Weekly Roberts Report

by 5m Editor
21 July 2010, at 9:57am

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

LEAN HOGS on the CME closed down on Monday with the exception of the October contract. AUG’10LH futures finished at $81.625/cwt; down $0.075/cwt but $2.18/cwt higher than this time last week. The FEB’11LH contract closed down $0.725/cwt at $74.000/cwt and $0.55/cwt lower than last Monday. Futures gained early support on fund buying but lost those gains near the end of trading in profit taking. Weaker cash prices fueled the profit taking late in the day. The latest CME lean hog index was placed at 77.96; down 0.16 and 1.37 lower than a week ago. According to HedgersEdge.com, the average packer margin was placed at a positive $3.60/hd based on the average buy of $56.46/cwt vs. the average breakeven of $57.78/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The SEPT’10 contract closed at $3.814/bu; down 13.25¢/bu. DEC’10 corn futures closed off 13.25¢/bu at $3.940/bu but 2.0¢/bu higher than last Monday. The DEC’11 contract closed at $4.196/bu; down 8.5¢/bu. Weather markets were the feature on the day for grain traders in Chicago as they were last week. In addition to prospects for good production weather slowing buyer enthusiasm, larger-than-expected long positions by funds in corn weighed on prices. Funds sold 10,000 contracts in technical selling and profit taking after aggressive buying on dry weather forecasts last week. The market really lacks strong fundamental support to maintain last week’s gains. USDA placed the US corn crop in good-to-excellent rating at 73 per cent. Cash corn was mostly steady to firm in the US Midwest. USDA on Monday put corn-inspected-for-export at 39.913 mi bu vs. expectations for 32-38 mi bu. China is seen at a tipping point in its supply and demand situation for corn that could lead to higher annual imports of 2 – 3 million tonnes (78.7 – 118.4 mi bu) in the near term and as much as 10 – 15 mi tonnes (393.7-590.5 mi bu) in as little as five years. It is a good idea to sell up to 70 per cent of the 2010 crop and consider selling 20 per cent of the 2011 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The AUG’10 soybean contract closed at $10.080/bu; off 11.5¢/bu. SEP’10 soybean futures finished down 11.75¢/bu at $9.862/bu but 20.0¢/bu higher than last report. NOV’10 futures closed at $9.720/bu, down 13.0¢/bu but 21.0¢/bu higher than a week ago. It should be noted that China is seen as becoming a net importer of soybeans now and that usually over ½ of their imports now come from the US Exports were a neutral influence with USDA on Monday reporting soybeans-inspected-for-export at 6.851 mi bu vs. expectations for 4-7 mi bu. Good growing weather for soybeans in the offing and technical selling on profit taking by large non-commercials pressured prices. Funds sold 4,000 lots after establishing long positions on weak fundamentals over the last two weeks. Late Monday USDA put the US soybean crop in good-to-excellent condition at 67 per cent vs. 65 per cent last week. Several floor sources said traders generally expected USDA to place the rating at 64 per cent. Cash soybeans were steady to weaker amid respectable farmer selling.

Hopefully 80 per cent of the 2010 crop has been sold on last week’s price run up. It looks like the head of a head-and-shoulders may be forming going into the latter stages of crop development. Unless something happens these prices may not hold.

WHEAT futures in Chicago (CBOT) closed down on Monday. The SEPT’10 wheat contract closed at $5.822/bu; down 5.0¢/bu. JULY’11 futures finished down 6.25¢/bu at $6.476/bu but 35.0¢/bu cents higher than this time last week. Losses in corn and soybeans sparked similar technical selling on profit taking in CBOT wheat after last week’s run up in prices. Funds sold over 3,000 contracts. Exports were supportive as USDA reported wheat-inspected-for-export at 22.449 mi bu vs. expectations for 17-20 mi bu. Iraq bought 350,000 tonnes (12.86 mi bu) from multiple sources including 100,000 tonnes (3.67 mi bu) from the US Even though extreme drought conditions grip the Russian wheat belt that country still expects to export over 20 mi tonnes (734.9 mi bu). Cash wheat basis continued to weaken. Hopefully up to 60 per cent of the 2011 crop has been priced. It would be a good idea to price up 70 per cent at this time.