Weekly Roberts Report

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.
calendar icon 1 December 2010
clock icon 5 minute read

LEAN HOGS on the CME were off on Monday. DEC’10LH futures finished at $70.025/cwt; down $0.325cwt. The FEB’11LH contract closed down $0.925/cwt at $76.225/cwt. The APR’11LH contract closed at $80.800/cwt; off $0.575/cwt. The large premium to cash and a stronger US dollar seen as slowing exports weighed on prices. Packers were slow to buy on Monday due to stronger cash prices as a result of last week’s buying binge for the holidays. Spreaders sold February and bought December and April. USDA put the average cash pork price at $79.33/cwt; down $0.09/cwt. According to HedgersEdge.com, the average packer margin was raised $4.45/hd to a positive $25.50/hd based on the average buy of $47.55/cwt vs. the average breakeven of $56.83/cwt. The CME lean hog index was placed at 64.17 ¢ /lb; up 0.67 ¢ /lb.

CORN futures on the Chicago Board of Trade (CBOT) were up slightly on Monday. DEC’10 corn futures closed even with Friday’s close at $5.382/bu. The MAR’11 contract closed at $5.532; up0.25¢/bu. The DEC’11 contract closed at $5.100; up 3.0¢/bu. Good demand, and shrinking corn supplies were supportive while a stronger US dollar and lower than-expected exports held gains in check. USDA put corn-inspected-for-export at 23.877 mi bu vs. expectations for 24-27 mi bu. Export customers included Mexico and Russia which announced it was also buying Argentine corn. Even though demand remains strong, gains were limited by a lack of fresh fundamental news. Floor sources said traders were reducing exposure in the market with no new news. They also said that events in North Korea and Ireland, as well as ethanol issues hanging over the market left the pits less willing to take on more risk. US corn supplies as of August 31, 2011 are forecast at a 15-year low of 21 mi tonnes (826.7 mi bu). Funds sold an estimated 1,000 lots. It would be a good idea to price up to 50 per cent of the 2011 crop if you haven’t done so already.

SOYBEAN futures on the Chicago Board of Trade (CBOT) declined on Monday. JAN’11 futures closed at $12.350/bu, off 3.5¢/bu. The MAR’11 contract closed at $12.434/bu; down 3.5¢/bu. NOV’11 soybean futures closed down 0.5¢/bu at $11.580/bu. A firm US dollar and good crop weather in Brazil weighed on prices. Some technical selling and long liquidation was noted. The same world turmoil affecting corn was a factor in soybean prices on Monday. A higher US dollar pressures commodity prices as most raw materials are dollar-denominated, making it more expensive for foreign buyers to import from the US Chinese buying backed off previous expectations after driving soybean futures to 26-month highs earlier this month. USDA reported soybeans-inspected-for-export at 48.948 mi bu vs. expectations for 45-50 mi bu. Basis was steady-to-firm amid slow farmer selling. Basis refers to the relationship between cash prices in a local market and the trading level of national futures for that commodity. Basis reflects local market supply/demand factors: the availability of storage, production levels, consumption patterns, or transportation costs. Local buyers send their willingness/reluctance to buy cash commodities by strengthening/weakening the basis they offer, thereby regulating the flow of commodity from sellers. A weaker basis is one in which futures are gaining on cash markets while a stronger basis signals the cash market is gaining on futures prices. Funds sold an estimated 3,000 lots. It would be a good idea to get to 50 per cent priced in the 2011 crop and to have sold all 2010 soybeans.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $6.502/bu; up 2.0¢/bu. JULY’11 futures finished up 3.75¢ /bu at $7.282/bu. Wheat was the strongest commodity on Monday. Exports and dry weather were supportive. USDA put wheat-inspected-for-export at 20.818 mi bu vs. 14-18 mi bu. Jordan tendered an offer for 100,000 tonnes (3.674 mi bu). Dry weather in the US Plains and heavy rains in southeast Australia were seen as slowing wheat supplies. Wheat cash prices were steady-to-firm as export basis bids for soft-red-winter-wheat gained as much as 5.0 ¢ /bu at the US Gulf market Monday. Funds bought an estimated 3,000 lots. It would be a good idea to price up to 65 per cent of the 2011 wheat crop.

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