Lean hogs

Lean hogs on the CME finished up on Monday with the exception of the August 2011 contract. The APR'11LH contract closed at $93.250/cwt; up $0.100/cwt but $0.95/cwt lower than a week ago. AUG'11LH futures closed at $100.85/cwt; down $0.025/cwt and $3.25/cwt off from last report. Higher pork prices on faltering beef and talk of higher cash trade this week were supportive. Seasonal trend-strength in hog prices ahead of Memorial Day was seen as positive in the pits. Export markets were very supportive as Japan increased imports due to the disaster there and South Korea buys more amid herd reductions on reports of foot-and-mouth disease there limiting internal supply. Higher corn prices kept the lid on however hog prices. Cash processor demand was flat on Monday while they take a 'wait-and-see' attitude toward price movement. These same processors may have to bid up prices later in the week to fill processing lines. USDA put the pork cut-out at $94.28/cwt; up $0.32/cwt and $0.16/cwt higher than last week at this time. According to HedgersEdge.com, the average packer margin was at a positive $0.85/head based on the average buy of $67.82/cwt vs. the average break-even of $68.13/cwt. The latest CME lean hog index was placed at $91.23; up $0.20 and $2.62 over last report.

Corn

Futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY'11 contract closed at $7.776 up 8.0 cents/bu and 17.5 cents/bu over last week at this time. The DEC'11 contract closed at $6.572; up 4.25 cents/bu and 11.75 cents/bu over last report. Dwindling US corn stocks continued to support corn futures. Unless corn exports slow the US is treading thin ice and may run the risk of depleting its corn supplies before harvest amid stocks at their lowest levels since the 1930s. Good corn planting weather has helped producers get off to their best start yet as intentions show farmers plan to plant the second largest area to corn since World War II. Everybody and his brother are planting corn or cotton. Tight local corn supplies have encouraged the Chinese government to sell more off-quality wheat from government reserves for livestock feed. Funds bought more corn positions raising net long positions to their highest levels in four weeks after last week's USDA stocks report. Funds continue to build long positions and if this keeps up any glitch in the corn supply will have a huge impact on prices. Fundamentally corn continues to show bullish strength.

Soybean

Futures on the Chicago Board of Trade (CBOT) finished fell on Monday. The MAY'11 contract closed at $13.684/bu; down 23.75 cents/bu and 15.75 cents/bu lower than last Monday. NOV'11 soybean futures closed off 15.75 cents/bu at $13.802/bu and 8.75 cents/bu lower than last report. Soybeans saw their largest decline in a month, sliding almost two per cent as South America reports a bumper crop harvest there and growing concerns that China may slow soybean imports. Early Monday, Chinese officials said it is highly likely that some cargoes of soybeans will be deferred or even cancelled due to poor crush margins. Barge basis for soybeans was steady to weak early Monday amid slow grain movements and slack demand. Lower crude oil futures put pressure on soybeans, particularly on the soybean oil contract. Fundamentally soybeans are looking more bearish.

Wheat

Futures in Chicago (CBOT) closed down on Monday with the exception of the nearby May contract. The MAY'11 wheat contract closed at $7.982/bu; up 0.75 cents/bu and 8.25 cents/bu over last report. JULY'11 futures finished down 0.5 cents/bu at $8.316/bu but 5.0 cents/bu higher than this time last week. Wheat prices were fairly firm on corn strength. However, prices were limited due to forecasts for rain in the US Plains. Profit taking also weighed on prices. China said last Tuesday it will sell another significant portion of state wheat reserves because quality problems. This is the second such sale for animal feed production amid tight local corn supplies. India is yet to decide whether it will allow exports of wheat this year. Fundamentally wheat has some strength. Weather markets will begin to weigh in.