Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 28 September 2010
clock icon 5 minute read

LEAN HOGS on the CME finished up on Monday. OCT’10LH futures finished at $79.150/cwt; up $0.125/cwt and $0.625/cwt over last Monday. The FEB’11LH contract closed up $0.500/cwt at $79.975/cwt but $0.40/cwt lower than last report. USDA’s hogs and pigs report last Friday is generally seen as neutral according pit sources as the lower numbers were expected. Higher cattle prices, lower corn futures, and funds holding onto long positions were supportive. October/December and December/February spreads were noted. USDA put the average cash pork cutout price at $90.15/cwt, up $0.58/cwt but $0.99/cwt lower than this time last week. The latest CME lean hog index was placed at 82.44/lb, down 1.07/lb and 0.60/lb lower than last report. According to HedgersEdge.com, the average packer margin was lowered $4.80/head to a positive $11.70/hd based on the average buy of $60.50cwt vs. the average breakeven of $64.84/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. DEC’10 corn futures closed off 9.0¢/bu at $5.126/bu but 4.5¢/bu over last report. The MAR’11 contract closed at $5.252/bu; down 9.0¢/bu but 4.0¢/bu higher than last Monday. The DEC’11 contract closed at $4.842/bu; down 5.5¢/bu but 11.0¢/bu higher than last Monday. Profit taking, soy/corn spreading, waning technicals, and improving harvest weather weighed on prices. With the USDA crop report on the horizon and the end of quarter approaching traders are taking profits on recent sharp gains. Corn futures are seen as overbought. Exports were ho-hum with USDA putting corn-inspected-for-export at 34.003 mi bu vs. 32-36 mi bu. Japan bought 108,712 tonnes (4.28 mi bu) for 2010/11 delivery while Russia expressed interest in buying US corn. USDA late Monday put the U.S. corn harvest at 27% complete vs. the 5-year average of 15% sending more supplies into the pipeline improving recent quality problems. Yield estimates range from 155-160 bu/ac. According to floor sources traders the pits expected as much. Cash corn was steady-to-firm but interest should wane amid rising barge freight rates. Funds sold over 13,000 lots in light volume of 272,000; below the 30-day average of 321,632. Hopefully 90% of the 2010 crop has been priced. It would be good to consider pricing up to 60% of the 2011 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. NOV’10 futures closed at $11.284/bu, up 2.5¢/bu and 44.0¢/bu higher than last report. The MAR’11 contract closed at $11.456/bu; up 3.25¢/bu and 43.75¢/bu higher than a week ago. NOV’11 soybean futures closed up 0.25¢/bu at $10.984/bu and 28.0¢/bu higher than last week at this time. Talk of dry weather in South America, soy/corn spreading, tightening supplies, and news of Chinese buying was supportive. Brazil’s Mato Grosso and Goias states continue to report hot, dry weather. Corn futures were considered cheap relative to soybeans. USDA reported soybeans-inspected-for-export at 18.622 mi bu vs. estimates for 9-13 mi bu. Late Monday USDA put the US soybean harvest at 17 per cent complete vs. the 5-year average of 13 per cent. Cash soybeans were weak amid brisk farmer selling. Funds bought 3,000 lots amid a volume of nearly 147,000 contracts. The 30-day average is 101,037 lots. Advancing sales in 2010 and 2011 soybeans would be a very good idea.

WHEAT futures in Chicago (CBOT) finished down on Monday. The DEC’10 wheat contract closed at $7.064/bu; down 13.5¢/bu and 25.25¢/bu lower than last Monday. JULY’11 futures finished off 9.75¢/bu at $7.346/bu and 15.5¢/bu lower than a week ago. Profit taking and lower European wheat prices amid advancing harvests were not supportive. Exports were neutral. After big gains on Friday hedgers added to the bottom line. USDA put wheat-inspected-for-export at 24.275 mi bu vs. estimates for 24-28 mi bu. News reports surfaced that Russia could reverse its standing export ban as rains there improve prospects for the next wheat crop. More cancellations were noted as buyers see global supplies as ample and reports expecting Russia to become a global wheat source again soon. Cancellations of US wheat export sales have occurred for the past two weeks now. Funds reversed long positions in CBOT wheat selling more than 3,000 lots amid volume just over 52,000 contracts; below the 30-day average of 83,223. Now, more than ever would be a good time to get up to 85% of the 2011 crop priced.

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