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Weekly Roberts Report

by 5m Editor
8 December 2010, at 12:52am

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 $68.350/cwt; down $0.925cwt and $1.675/cwt under last report. The FEB’11LH contract closed down $1.325/cwt at $75.250/cwt and $0.975/cwt lower than this time last week. The APR’11LH contract closed at $79.050/cwt; off $1.225/cwt and $1.75/cwt lower than a week ago. Lower cash markets amid slower pork retail sales pressured prices. Processor demand was weaker amid reports that most processing plants have enough hogs booked through the end of the week. Early projections for the weekend slaughter were estimated down 30,000 head from last week’s figure. USDA put the average cash pork price at $77.12/cwt; down $0.77/cwt and $2.21/cwt lower than last report. According to HedgersEdge.com, the average packer margin was lowered $8.05/hd to a positive $17.45/hd based on the average buy of $48.85/cwt vs. the average breakeven of $55.19/cwt. The CME lean hog index was placed at 68.10 ¢ /lb; up 0.75 ¢ /lb and 3.93 ¢ /lb over last week at this time.

CORN futures on the Chicago Board of Trade (CBOT) finished down on Monday. DEC’10 corn futures closed down 5.25 ¢ /bu at $5.536/bu but 15.5 ¢ /bu over last report. The MAR’11 contract closed at $5.680; off 5.5 ¢ /bu but 14.75 ¢ /bu higher than a week ago. The DEC’11 contract closed at $5.292; down 5.25 ¢ /bu but 19.25 ¢ /bu over last Monday. Sluggish exports amid a firm US dollar and profit taking on short covering and fund long liquidation pressured prices. Additionally, global grain supplies are expected to increase from Australia’s water-damaged wheat crop. USDA put corn-inspected-for-export at 25.233 mi bu vs. expectations for 25-30 mi bu. Ethanol credits are expected to continue to support demand as the US Congress considers tax bill cuts and leaves the subsidy alone. The US ethanol sector are bracing for looming subsidy cuts if the current status quo expires. Traders are adjusting positions ahead of USDA’s World Agriculture Supply Demand Estimate (WASDE) report due out Friday that is expected to reduce export demand for expensive US corn. Cash corn was steady to firm amid good farmer selling in response to higher corn prices. This increase in movement has started to weaken basis in many areas. Funds sold an estimated 8,000 lots. It would be a good idea to price another 10 per cent of the 2011 crop taking you to 60 per cent priced.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished down on Monday. JAN’11 futures closed at $12.884/bu, off 11.75 ¢ /bu but 53.5 ¢ /bu over last report. The MAR’11 contract closed at $12.952/bu; down 11.75 ¢ /bu but 51.75 ¢ /bu higher than a week ago. NOV’11 soybean futures closed down 9.5 ¢ /bu at $11.986/bu but 40.75 ¢ /bu over last Monday’s close. Poor exports, a higher US dollar, and a sell-off in corn kept the lid on soybean prices. The market was somewhat supported by poor crop weather in Argentina. USDA put soybeans-inspected-for-export at 33.495 mi bu vs. expectations for 49-54 mi bu. China was a big buyer at 171,000 tonnes (6.3 mi bu). Brazil’s agriculture ministry put its estimated soybean output at 68.1 mi tonnes (2.498 bi bu) vs. 69.1 mi tonnes (2.539 bi bu) last year. The USDA attaché lowered its forecast of Brazil’s 2010/11 soybean crop to 66.8 mi tonnes (2.45 bi bu). Additional pressure on prices surfaced late amid reports that US crush demand will slow due to thin processor margins. The dollar climbed on a worsening European credit situation. The US dollar is viewed as a “safe haven“ for investors until a credit salvage plan can be agreed on among the European Union members. Funds sold over 5,000 lots. It would be a good idea to hold at 50 per cent priced in the 2011 crop.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $7.520/bu; up 14.0 ¢ /bu and $1.0175/bu over last report. JULY’11 futures finished up 21.0 ¢ /bu at $8.076/bu and 79.5 ¢ /bu higher than a week ago. Excessive rains are hurting the Australian wheat harvest. In addition to this, dry weather in parts of the western US Plains and China’s wheat belt are supportive of wheat prices. However support was offset by a firm US dollar. Much of the finer wheat for food produced by Australia is fast becoming feed-grain grade. Some reports show yields of high-quality Australian prime wheat dropping 750,000 tonnes (27.6 mi bu) to 250,000 tonnes (9.2 mi bu). Reports from China indicate production there could be nearly 17 per cent lower than last year due to severe drought. Exports were steady with USDA putting wheat-inspected-for-export at 19.215 mi bu vs. expectations for 18-22 mi bu. USDA confirmed sales of 160,000 tonnes (5.9 mi bu) of US hard red wheat for 2010/11 delivery. Funds sold nearly 6,000 lots. It would be a great idea to price another 10 per cent of the 2011 wheat crop taking it to 75 per cent covered.

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