Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 12 October 2010
clock icon 4 minute read

LEAN HOGS on the CME finished mixed on Monday. OCT’10LH futures finished at $73.700/cwt; off $0.825cwt and $1.975/cwt lower than last Monday. The FEB’11LH contract closed down $0.950/cwt at $77.000/cwt but $4.075/cwt higher than last report. The APR’11LH contract closed at $84.450/cwt; up $0.75/cwt. According to several floor sources deferred futures were supported by traders thinking that the corn rally will slow hog production. However, weak cash markets caused profit taking and nearby selling. Trade was thin due to the Columbus Day holiday. Packer offers were $0.50-$1/cwt lower on Monday. USDA’s average cash pork price on Monday was placed at $83.44/cwt; down $0.14/cwt and $3.52/cwt under last report. The latest CME lean hog index was placed at 78.22/lb, down 1.02/lb and 5.46/lb lower than last report. According to HedgersEdge.com, the average packer margin was raised $2.55/head to a positive $17.60/hd based on the average buy of $53.48cwt vs. the average breakeven of $59.97/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. DEC’10 corn futures closed up 27.5¢/bu at $5.556/bu; 84.25¢/bu higher than last report. The MAR’11 contract closed at $5.650/bu; up 27.25¢/bu and 82.0¢/bu higher than last Monday. The DEC’11 contract closed at $5.140/bu; up 2.75¢/bu and 47.75¢/bu over last Monday. The rally continued for the third straight day near two-year highs. An estimated 536,284 lots traded hands; just under the record of 556,034 contracts. The trade continued to focus on USDA’s report from last Friday that sharply cut this year’s US corn crop outlook. USDA lowered this year’s production estimate from last year’s record of 13.1 bi bu to 12.7 bi bu on an estimated yield/ac of 155.8 bu. Last year’s production finished at164.7 bu/ac. At the same time, high consumption levels and demand for corn exports are taking US corn supplies to their lowest levels in 14 years. The stocks-to-use ratio is at the lowest level in 15 years. Prospects that the Chinese grain harvest will exceed last year’s crop kept the lid on prices. Cash corn bids were steady-to-firm as farmers have sold most of the crop already are waiting on higher prices. Many analysts are saying $6/bu corn is not out of the question now.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. NOV’10 futures closed at $11.524/bu, up 17.5¢/bu and 98.5¢/bu higher than last report. The MAR’11 contract closed at $11.722/bu; up 19.0¢/bu and 99.75¢/bu over a week ago. NOV’11 soybean futures closed up 1.5¢/bu at $11.314/bu; 84.25¢/bu higher than last week at this time. The USDA report last Friday was also bullish for soybeans and the rally in CBOT corn futures was supportive. Trading volume was estimated at a record 316,996 lots; 22,896 contracts more than the previous record of 294,100 lots. Tight global supply outlook, trimmed US production, and ending stocks cut in Friday’s USDA crop report provided the catalyst for limit price moves last Friday. To date, Brazilian producers have sold just over 20 per cent of the 2010/11 soybean crop. Higher price levels have not slowed China’s year-to-year increases in imports. China is the global leader in soybean imports and the number one buyer of US supplies. Cash soybeans were steady-to-weaker amid brisk farmer harvest selling. Having sold most of the 2010 crop it is not necessary to sell more as soybeans are showing more upside potential.

WHEAT futures in Chicago (CBOT) finished down on Monday. The DEC’10 wheat contract closed at $7.092/bu; down 10.0¢/bu but 62.0¢/bu over last Monday. JULY’11 futures finished off 6.75¢/bu at $7.582/bu but 61.75¢/bu higher than a week ago. Profit taking weighed on prices. News that the Ukraine harvest is down 93 per cent from the sown acreage was supportive. An estimated 87,432 contracts traded vs. the 30-day average of 72,189 lots. Fresh fundamental news is needed to push prices higher. Wheat futures soared during the summer on supply fears amid fears that a historic Russian drought would threaten global supply. Hopefully sales of 2011 wheat were advanced to 85 per cent last week.

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