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Weekly Roberts Market Report

by 5m Editor
2 February 2011, at 12:52am

US - October futures and beyond were lower an average of $0.65/cwt. Short covering, end-of-month buying, and the winter storm supported higher hog prices.

LEAN HOGS on the CME finished mixed on Monday with futures from February 2011 through August 2011 up and deferreds lower. The FEB’11LH contract closed up $1.500/cwt at $87.250/cwt; $8.22/cwt higher than last week at this time. The APR’11LH contract closed at $94.000/cwt; up $0.375/cwt and $7.750/cwt over last report. AUG’11LH futures closed at $97.325/cwt; up $0.225/cwt and $0.825/cwt higher than last week at this time. October futures and beyond were lower an average of $0.65/cwt. Short covering, end-of-month buying, and the winter storm supported higher hog prices. In other news South Korea signaled willingness to increase imports and lower tariffs. Cash hogs traded $1-$2/cwt higher on Monday. USDA on Friday put the pork cutout at $88.57/cwt; up $0.88/cwt and $2.93/cwt higher than last Monday. According to HedgersEdge.com, the average packer margin was lowered $4.20/hd to a positive $11.75/hd based on the average buy of $59.57/cwt vs. the average breakeven of $63.67/cwt. The latest CME lean hog index was placed at 78.32 ¢/lb; up 0.62 ¢/lb and 2.18 ¢/lb over last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The MAR’11 contract closed at $6.594; up 15.5 ¢ /bu and 4.25 ¢ /bu higher than last week at this time. The DEC’11 contract closed at $5.912; up 14.75 ¢/bu and 4.0 ¢/bu over last report. Wheat strength, a weaker dollar, higher crude oil, a port strike in Argentina, and end-of-month fund buying were supportive. Wheat prices affect corn prices as they are both used for feed. US corn is more affordable on the world market when the US dollar is weaker compared to other currencies. London’s Brent crude closed over $101/barrel on fears Egypt’s unrest could spread to oil producing areas. Corn prices have been tracking crude prices for some time now as corn is correlated to fuel. Fund buying near month end is a result of account balancing on profits or losses from energy investments, primarily crude oil. Funds bought over 8,000 lots. Exports were weaker than expected as USDA put corn-inspected-for-export at 18.690 mi bu vs. expectations for 25-30 mi bu. Cash corn was steady-to-firm at US Midwest elevators and ports. Crops are battling for acres. Demand for ethanol remains strong as the US approved use of E-15 in vehicles newer than 2005. However, after talking with congressional representatives last week there is a strong desire in Washington to reduce or eliminate the blender’s credit. This could produce a fundamental shift in demand.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAR’11 contract closed at $14.130/bu; up 15.0 ¢/bu and 8.75 ¢/bu over last report. NOV’11 soybean futures closed up 18.0 ¢/bu at $13.410/bu and 4.5 ¢/bu higher than last Monday at this time. A strike in Argentina, spillover support from wheat, a weak US dollar, firm crude, and end-of-month fund balancing were supportive. The Argentine union indicates the grain port strike may grow. Exports were weak with USDA putting soybeans-inspected-for-export at 29.69 mi bu vs. expectations for 39-43 mi bu. Cash soybeans were steady-to-firm at elevators while river bids were weaker. Funds bought nearly 5,000 lots. Soybean prices look competitive and most likely will compete for corn acres.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAR’11 wheat contract closed at $8.406/bu; up 15.0 ¢/bu and 5.5 ¢/bu over last report. JULY’11 futures finished up 14.75 ¢/bu at $8.894/bu and 10.75 ¢/bu higher than this time last week. Floor sources said that worries about winterkill in the southern US Plains this week by a major storm could affect yields. The light snowfall totals will leave the crop vulnerable to crop damaging frigid temperatures. Flooding in Australia is hampering wheat shipments from that country. The US, the world’s top wheat exporter, is seen as one of the last places to get high-quality wheat. Egypt is the world’s largest importer of wheat. Protests there are slowing global wheat trade. USDA put wheat-inspected-for-export at 21.313 mi bu vs. trade estimates of 20-25 mi bu.