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Weekly Roberts Report

by 5m Editor
21 September 2010, at 12:59am

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

LEAN HOGS on the CME finished up on Monday. OCT’10LH futures finished at $78.525/cwt; up $0.825/cwt and $2.225/cwt over last Monday. The FEB’11LH contract closed up $0.775/cwt at $80.375/cwt and $2.80/cwt higher than last report. Hogs were supported by the discount to cash ahead of seasonal demand and fund buying. Analysts are estimating 2.4-2.9 per cent lower supplies ahead of USDA’s cold storage report because of herd reductions over the past two years. USDA put the average cash pork cutout price at $91.14/cwt, down $0.67/cwt but $1.29/cwt higher than this time last week. The latest CME lean hog index was placed at 83.04/lb, up 0.12/lb and 0.57/lb higher than last report. CME’s hog index represents the actual price of hogs on a lean basis quoted by USDA and lags behind the spot month by two days. According to HedgersEdge.com, the average packer margin was raised $4.90/head to a positive $16.50/hd based on the average buy of $59.43cwt vs. the average breakeven of $65.57/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. DEC’10 corn futures closed off 5.0¢/bu at $5.082/bu but 24.75¢/bu over last report. The MAR’11 contract closed at $5.212/bu; down 4.5 cents from Friday. The DEC’11 contract closed at $4.732/bu; down 4.5¢/bu but 17.25¢/bu higher than last Monday. Corn futures rallied to their highest level in two years then retreated to end down for the day on profit-taking and farmer hedge-selling. According to several floor sources traders backed off fears that a late US harvest and frost in China might limit supplies. Others on the floor see corn prices falling after such a strong opening as a predictor of topping action in corn futures. Even the most pessimistic traders don’t think the supply hiccup is worth $5.22/bu. Most sources believe, me included that corn prices will be pulling back over the next few days. USDA’s World Agriculture Supply Demand Estimate (WASDE) report due out October 8 should give another snapshot of supply. The most recent report by USDA projected an average yield of 162.5 mi bu per acre. Exports were disappointing with USDA putting corn-inspected-for-export at 28.460 mi bu vs. expectations of 35-40 mi bu. China is expected to continue importing corn as imports soared to 432,191 tonnes (17 mi bu). Funds sold 7,000 lots on profit taking amid a volume of 356,000 contracts, up 10 per cent from the 30-day average of 323,218 lots. It is significant to note that net fund length in corn was at 444,100 lots, the highest since April 1996 and 32 per cent open interest, an all-time high. Cash corn was flat to weaker amid brisk farmer selling.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. NOV’10 futures closed at $10.844/bu, up 15.5¢/bu and 50.0¢/bu higher than last report. The MAR’11 contract closed at $11.020/bu; up 17.25¢/bu from last close. NOV’11 soybean futures closed up 14.5¢/bu at $10.704/bu and 43.5¢/bu higher than last week at this time. Soybeans finished up a one-year high on concerns of dryness in portions of South America’s crop region prior to planting, a freeze in Canada that may harm immature canola, and a freeze in China. USDA put soybeans-inspected-for-export at 12.078 mi bu vs. expectations for 8-12 mi bu. China bought 225,000 tonnes (8.3 mi bu). Oil prices rose after a new report on Monday said the US has endured the longest recession since World War II. Crude oil futures influence demand for corn and soybean prices because of their relationship with energy. While corn yields are looking off reports of soybean yields so far are promising. Prices are being influenced by corn and wheat strength even though American farmers are expected to harvest a bumper crop in 2010. Funds bought 5,000 lots with volume near 160,000 contracts, up nearly 65 per cent from the 30-day average of 96,929.

WHEAT futures in Chicago (CBOT) finished mixed on Monday with nearby contracts up to JULY’11 down while the JULY’11 contract and those past it showing gains. The DEC’10 wheat contract closed at $7.316/bu; down 7.5¢/bu from Friday’s close. JULY’11 futures finished up 2.75¢/bu at $7.500/bu and 6.0¢/bu higher than a week ago. Nearbys suffered from profit taking with deferreds supported by dry weather in Australia, Russia, parts of Argentina, and season-ending frost in Canada. Exports were somewhat supportive with USDA reporting wheat-inspected-for-export at 29.934 mi bu vs. expectations for 25-30 mi bu. Wheat prices retreated on profit-taking since the Russian announcement of the market-shocking ban on grain exports early last month. Market participants remain nervous about global grain production because Russia needs more rain to plant its next wheat crop. Funds sold 3,000 lots amid 59,000 contract volume which was down nearly 50 per cent from the 30-day average of 113,148 lots.