Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 9 November 2010
clock icon 5 minute read

Last week crop conditions in Argentina were very, very hot and tending to pressure the emerging crop. Two weeks ago soil moisture was adequate but hot, dry weather is wilting young plants that were germinating just a week ago. If this continues both corn and soybeans could suffer yield losses. Timely rains and forecasts for showers next week look to boost crop prospects in Brazil.

LEAN HOGS on the CME finished up on Monday. DEC’10LH futures finished at $67.150/cwt; up $0.200cwt. The FEB’11LH contract closed up $0.650/cwt at $74.175/cwt. The APR’11LH contract closed at $79.150/cwt; up $1.050/cwt. Lower corn prices, seasonal demand and steady cash prices were supportive. Rolling of long December positions by funds and profit taking kept the lid on. Funds rolled 3,000 lots near the end of trading while rolling nearly 10,000 contracts on the day. USDA put the average cash hog price at $77.17/cwt, up $0.03/cwt while cash hogs in Iowa and Minnesota were steady-to-firm. Fundamentally the US hog supply has stabilized and looks like supplies have peaked. Heavy hogs going to market are declining in number amid improved demand. Exports were supportive. According to HedgersEdge.com, the average packer margin was placed at a positive $28.45/hd based on the average buy of $45.14/cwt vs. the average breakeven of $55.45/cwt. The CME lean hog index was placed at 61.71¢/lb; down 0.32¢/lb.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. DEC’10 corn futures closed off 2.5¢/bu at $5.852/bu. The MAR’11 contract closed at $5.9924/bu; down 2.5¢/bu. The DEC’11 contract closed at $5.530/bu off 2.25¢/bu. Sporadic fund selling, profit taking, a firm US dollar, and weak export activity weighed on prices. Funds were selling and taking profits ahead of Tuesday’s USDA November crop report that will be released at 8:30 am EST. When the US dollar makes gains US commodities cost global importers more than in other countries so they turn away from US products. USDA put corn-inspected-for-export at 24.890 mi bu vs. expectations for 27-31 mi bu. Fundamentally US corn stocks are approaching 15-year lows. Cash corn was steady-to-firm in both the US Midwest and the Atlantic states. Funds sold nearly 2,000 lots. Futures have shot up over 80 per cent since June amid concerns that the US corn crop will not be large enough to meet strong global demand. The most recent survey shows that analysts expect a US crop of 12.545 mi bu with a yield of 154.4 bu/ac leaving corn ending stocks, on average, at 840 mi bu. Last October USDA put the US corn crop at 12.664 mi bu on a yield of 155.8 bu/ac with ending stocks at 902 mi bu. That news sent corn futures sharply higher. The US is the world’s largest producer of corn. The market is near the top end of nearby trading range on tighter balance sheet outlook. If possible it would be a good idea to advance some sales of the2011 and even the 2012 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished off on Monday. NOV’10 futures closed at $12.644/bu, down 9.0¢/bu. The MAR’11 contract closed at $12.832/bu; off 9.25¢/bu. NOV’11 soybean futures closed down 7.25¢/bu at $12.146/bu. Some long liquidation ahead of the USDA crop report, overbought chart signs, smaller-than-expected exports, and a firm US dollar pressured prices. Funds were squaring long positions even though there is fundamental strength in the US soybean crop. Funds sold about 4,000 lots taking profits on prices about 19 per cent higher than previous months. USDA put soybeans-inspected-for-export at 56.914 mi bu vs. expectations for 64-68 mi bu. Exports have been sizzling of late with China the biggest importer. Brazil showers were very helpful to the crop there while dry weather in the central regions of Argentina is hurting those soybeans there. Fundamentally USDA is expected to raise the estimate of US production but lower ending stocks on strong global demand for US soybeans. Average analysts’ place the US crop size3.426 bi bu on a yield of 44.6 bu/ac resulting in US ending stocks at 240 mi bu. It would be a good idea to advance some 2011 and 2012 soybeans sales.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $7.362/bu; up 7.5¢/bu. JULY’11 futures finished up 8.0¢/bu at $8.104/bu. Concerns of dry weather threatening the US winter wheat crop, short covering ahead of the USDA crop report, and steady exports were supportive. Funds bought an estimated 4,000 lots. Analysts on average expect USDA to raise US wheat stocks by 2 mi bu. Exports held prices back somewhat. USDA put wheat-inspected-for-export at 15.539 mi bu vs. expectations for 19-21 mi bu. Dryness is seen as stressing the Australian wheat crop but expectations for showers later in the week held prices in check. Global stocks are getting tighter but there is still plenty of wheat in inventory. News reports spur fund buying. It would be a good idea to price 2011 and 2012 wheat now.

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