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Weekly Roberts Report

by 5m Editor
19 October 2010, at 12:00am

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

LEAN HOGS on the CME finished down on Monday. DEC’10LH futures finished at $68.025/cwt; off $0.875cwt. The FEB’11LH contract closed down $0.450/cwt at $72.875/cwt and $4.125/cwt lower than last report. The APR’11LH contract closed at $77.375/cwt; off $0.375/cwt and $7.075/cwt lower than this time last week. Losses were led by the most-active December contract. Futures were pressured by lower cash hog prices on large supplies of market-ready hogs in this cooler weather. Fall weather of this type is great for growing off feeder pigs. Hogs this time of year also come to the plants heavier. USDA put the average weight at 272.6 lbs vs. 270.7 this time last week and 268.9 lb/head a year ago. Lower corn futures were somewhat supportive. The average cash pork price according to USDA was placed at $81.07/cwt, down $0.14/cwt and $2.37/cwt lower than last report. The latest CME lean hog index was placed at 72.74/lb, down 1.32/lb and 5.48/lb lower than last report. According to HedgersEdge.com, the average packer margin was raised $9.75/head to a positive $27.35/hd based on the average buy of $48.08cwt vs. the average breakeven of $58.12/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys down for the fourth straight trading day. DEC’10 corn futures closed off 5.75¢/bu at $5.5572/bu but 1.75¢/bu higher than last report. The MAR’11 contract closed at $5.692/bu; down 5.75¢/bu but 4.25¢/bu higher than last Monday. The DEC’11 contract closed at $5.166/bu; even with last Friday’s close and 2.75¢/bu over last Monday. Overbought conditions, profit taking, harvest pressure, and lower-than-expected exports weighed on prices. Funds were major sellers today selling over 10,000 lots amid mild volume. USDA reported corn-inspected-for-export at 28.170 mi bu vs. expectations of 35-40 mi bu. Late Monday USDA placed the US corn harvest at 68 per cent complete a record pace considering that the 5-year harvest average is 39 per cent. Traders expected the US corn harvest to be 65-70 per cent complete. Cash corn basis was steady amid sluggish farmer selling. Harvest pressure and technical trading could weaken prices further. However, if harvest numbers show poor yields, exports increase, and ethanol demand increases prices will be supported.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday with nearbys lower on harvest pressure and deferreds up. NOV’10 futures closed at $11.840/bu, down 1.0¢/bu but 31.75¢/bu higher than last report. The MAR’11 contract closed at $12.032/bu; off 0.25¢/bu but 31.0¢/bu over a week ago. NOV’11 soybean futures closed up 5.0¢/bu at $11.522/bu and 20.75+¢/bu higher than last week at this time. Soybean prices were pressured by an active US harvest, profit-taking on overbought chart signals, and good soybean crop weather in South America. Late Monday USDA placed the US soybean harvest at 83 per cent complete vs. the 5-year average of 62 per cent. Volume was placed at 178,000 contracts, above the 30-day average of 155,000 lots. Managed funds added to net longs positions while Index funds sold over 1,000 contracts. Managed funds are typically long only while Index or Hedge funds trade both long and short depending mainly on technical signals. Prices were supported by good export demand. USDA put soybeans-inspected-for-export at 59.384 mi bu vs. expectations for 45-50 mi bu. A large order of US soybeans to China was confirmed late Monday. US cash soybean prices were steady-to-firm early Monday amid slow farmer selling. Soybean prices have some fundamental support. Since the US harvest is near 90 per cent complete most analysts are comfortable with yield numbers and expect prices to fundamentally hold.

WHEAT futures in Chicago (CBOT) finished down on Monday. The DEC’10 wheat contract closed at $6.900/bu; down 14.5¢/bu and 16.25¢/bu lower than last Monday. JULY’11 futures finished off 8.5¢/bu at $7.66/bu and 2.25¢/bu lower than a week ago. Spillover losses in corn futures, technical selling signals, profit taking, lower-than-expected exports, and rain for the US winter wheat crop pressured prices. Funds sold nearly 5,000 lots. USDA put wheat-inspected-for-export at 20.798 mi bu vs. expectations for 21-25 mi bu. The Ukraine government put in place a grain exporting quota while the Australian and Russian wheat crops are plagued by adverse crop weather. Fundamentally wheat prices are mildly bearish at this time.

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