LEAN HOGS on the CME closed down in the largest one-day drop in nearly two weeks on Monday. The JUNE’11LH contract closed at $93.600/cwt; off $0.950/cwt and $4.125/cwt lower than a week ago. AUG’11LH futures closed at $93.425/cwt; off $1.050/cwt and $0.850/cwt lower than last report. Fund selling on lower crude oil futures pulled money out of the market. Worse-than-ideal weather continues to discourage spring grilling, slowing meat sales. Supplies of market-ready hogs generally decline in early summer which surprised floor sources in the pits. Hog processing the past two weeks ranged from 1.98- 1.99 mi head. Pork export demand is very supportive. USDA put the pork cutout at $95.35/cwt up $0.35/cwt and $4.91/cwt over last report. According to HedgersEdge.com, the average packer margin was raised $2.45/head to a positive $1.55/head based on the average buy of $68.11/cwt vs. the average breakeven of $68.68/cwt. The latest CME lean hog index was placed at $92.09; up $0.32 but $0.09 lower than last report. Fundamentally hog demand remains weak.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday with 2012 deferreds down. The MAY’11DA contract finished at $16.41/cwt; $0.03/cwt up but $0.09/cwt lower than last report. JULY’11DA futures finished at $17.57/cwt; up $0.07/cwt but $0.18/cwt lower than this time last week. Butter prices were asked higher with no takers. Cheese pits were active with over a dozen loads changing hands. Block prices were steady-to-firm. Powder prices were steady at levels 25 per cent-35 per cent over year ago levels. Cheese exports remained firm. USDA released its report on exports of US dairy products for the month of March. See Chart. Much of the increase in butter and nonfat powder exports are likely attributable to New Zealand meeting China’s need for huge amounts of milk powder. Fonterra has been concentrating its efforts on filling Chinese shortages. Production of dairy products in New Zealand has seen significant cutbacks are not expected to resume until local milk supplies peak later this fall. The resulting global shortages are gladly being filled by US supply. Additionally CWT has been encouraging US exports.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed down on Monday. The JUNE’11LC contract closed at $108.325/cwt, down $0.675/cwt and $0.675/cwt lower than a week ago. AUG’11LC futures closed at $109.750/cwt; down $0.800/cwt and $1.125/cwt lower than last report. The DEC’11LC contract closed at $117.275/cwt; down $0.525/cwt and $1.825/cwt lower than this time last week. Chart based selling and worries of slowing meat sales pressured prices. June’s discount to cash cattle was supportive but the price structure for beef is still too high so retailers are putting more chicken and pork in the case. USDA on Monday reported choice beef cutout at $176.39/cwt; up $1.60/cwt from Friday but $0.76/cwt lower a week ago. USDA put the 5-area-average at $112.81/cwt; $2.16/cwt lower than a week ago on very light volume. Cash sales should be pressured lower this week. According to HedgersEdge.com, the average packer margin was raised $32.95/head from a week ago to a negative $10.25/head based on the average buy of $113.69/cwt vs. the average breakeven of $112.87/cwt.

FEEDER CATTLE at the CME closed down on Monday. The MAY’FC11 contract closed at $127.950/cwt; down $0.750/cwt and $0.050/cwt lower than a week ago. The AUG’11FC contract settled at $131.225/cwt, down $1.225/cwt and $1.075/cwt under last report. Feeders followed live cattle lower on additional pressure from higher corn futures. Feeder steer prices were steady-to-weaker compared to last week to $3.00/cwt lower for yearling steers. The national feeder and stocker cattle summary for the week ending 5/12/11 put total receipts (includes auctions, direct, and video/internet sales) at 302,000 vs. 262,000 last week and 347,600 head this time last year. Steers and heifer calves traded $3-$5 lower amid light volume comprised mostly of very fleshy, unweaned types. In Oklahoma City estimated receipts were placed at 7,800 head vs. 7,301 head last week and 9,541 head this time last year. The latest CME feeder cattle index was placed at $129.35; up $0.29 but $0.65 lower than last report.

Grains prices jumped on Monday, reacting mostly to flooding risks in the US farm belt, and a weaker dollar boosted commodities broadly although oil drifted lower on worries about economic growth. Meanwhile, dry weather stressed the US winter wheat crop in Texas, Oklahoma and southern Kansas, where substantial crop losses are expected from more arid conditions forecast for the southern US regions.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys up and deferreds in 2012 closing down. The JULY’11 contract closed at $6.974/bu; up 15.5 ¢/bu. The DEC’11 contract closed at $6.354/bu; up 8.5 ¢/bu but 22.0 ¢/bu lower than last report. Funds have been taking money out of commodities on lower crude oil and a stronger dollar. However, they still have plenty of open long positions so the bull influence is not gone. Flooded acres are proving supportive. Significant losses of corn acres are expected along the Mississippi river basin. USDA put corn seeding progress at 63 per cent vs. the average analyst estimate of 60 per cent and 87 per cent this time last year and below the 70 per cent five-year average. Corn planted after the middle of May often has lower yields because of hot summer temperatures during critical reproductive stages.

Exports were supportive with USDA putting corn-inspected-for-export at 36.911 mi bu vs. expectations for 30-33 mi bu. Floor sources say there is persistent talk that China is willing to buy more US corn. Private exporters reported a significant sale of US corn to South Korea for delivery during 2010/11 marketing year. Cash corn bids were firm as processors and ethanol pushed prices amid slow farmer selling. River and gulf basis is still under pressure from very slow barge traffic due to high water and flooding. Demand for barges is weak as lower Mississippi River merchandisers are shut down by high water. Tlevent DTN said major flooding on the Mississippi River is affecting increasing amounts of farmland as spillways are being opened to prevent flooding in major cities. Fundamentally bullish pressure has slacked due to weaker global demand and lower fund dollars supporting bullish positions in corn.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys off and the last half of 2012 deferreds up. The JULY’11 contract closed at $13.264/bu; off 3.0 ¢/bu. NOV’11soybean futures closed 4.5 ¢/bu lower at $13.602 /bu and 43.0 ¢/bu lower than last report. USDA put soybean plantings at 22 per cent vs. estimates for 20 per cent; the five-year average of 31 per cent and 37 per cent this time last year. Wet weather and flooding is affecting soybean plantings as it has corn. However, soybeans may pick up some acres from corn acres flooded out if waters recede quickly enough. Nearby contracts closed lower as funds withdrew resources on lower crude oil while deferreds are still supported on ending stock concerns. Cash soybeans were steady-to-firm amid slow to no farmer selling. Farmers have sold all they need to in order to cover costs and holding out to see what this weather and demand will do to prices. They are taking more of a risk than the corn growers since more soybeans may be planted to flooded corn acres. Dry weather in Argentina is helping the harvest there with 82 per cent of the crop harvested. Brazil reported that its record crop is 99 per cent harvested. Exports were bearish with USDA putting soybeans-inspected-for-export at 5.149 mi bu vs. expectations for 6-9 mi bu and down 28 per cent from last week’s total. South American supplies are slowing demand for US soybeans in the export markets. Fundamentally soybeans remain bullish and volatile due to weather influences.

WHEAT futures in Chicago (CBOT) closed up on Monday. JULY’11 futures finished up 8.75 /bu at $7.364/bu but 54.0 ¢/bu lower than last week. The DEC’12 contract closed at $8.406/bu and 5.75 ¢/bu over last report. Dry weather is stressing the US hard red winter wheat crop in Texas, Oklahoma and southern Kansas. More crop losses are expected. Heavy flooding and wet weather threatened the soft red winter wheat crop in the US Midwest. Some frost damage was reported in the US hard red winter wheat belt as well. Weather, weather, weather! European and Australian wheat belts weren’t faring any better weather wise. Exports were neutral with USDA putting wheat-inspected-for-export at 30.04 mi bu vs. expectations for 30-32 mi bu. Late Monday USDA also put the wheat good-to-excellent condition at 32 per cent vs. 33 per cent a week ago and 66 per cent this time last year. Fundamentally wheat prices still show bullish strength.