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Weekly Roberts Market Report

by 5m Editor
21 September 2011, at 7:04am

US - Corn futures closed down on Monday and, with a high US dollar forcing countries to buy corn from elsewhere, corn exports are down, writes Michael Roberts.

LEAN HOGS on the CME closed mixed on Monday. OCT’11LH futures closed at $87.650/cwt; up $0.30/cwt and $0.975/cwt over last report. The DEC’11LH contract closed at $81.825/cwt; off $0.900/cwt and $0.90/cwt lower than this time last week.

MAY’12LH futures closed at $95.900/cwt; down $0.100/cwt and $0.90/cwt lower than a week ago. Late Monday USDA put the pork cutout at $95.37/cwt, up $0.15/cwt and $1.09/cwt over last report. In export news it looks like China is buying more pork to smooth volatile food prices.

China increased pork imports across summer months pushing US pork prices to record levels. Seasonally hog producers are looking to increase production on cooler weather.

Some contracts found support in rising cash prices which have been on the rise for the past two weeks on stronger demand. Packers continue to buy processing almost 5% more than this time last year.

According to HedgersEdge.com, the average packer margin was lowered $5.25/hd from last report to a positive $10.50/head based on the average buy of $64.77/cwt vs. the average breakeven of $68.70/cwt. The latest CME lean hog index was placed at $87.69; up $0.76 and $0.61 higher than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday with exception of the December 2011 contract. The DEC’11 contract closed at $6.922/bu; up 0.25 ¢ /bu but 53.25 ¢ /bu lower than a week ago.

End of session buying by funds in position jockeying near the close supported the December contract. MAR’12 futures closed at $7.050/bu; down 0.5 ¢ /bu. The DEC’12 contract closed down 8.25 ¢ /bu at $6.176/bu.

A firm US dollar and economic woes in Europe are weighing on CBOT prices. Exports were bearish with USDA putting corn-inspected for export at 22.394 vs. estimates for 23-32 mi bu. This was well below what was needed to stay on pace with USDA’s demand projection of 1.65 bi bu and in large part is being influenced by higher priced US corn.

Pit sources said China is said to be seeking Argentinean corn because it is cheaper than US corn right now. Meanwhile, already-purchased-corn in the amount of 4.8 mi bu is destined for China while 3.9 mi bu is going to Japan. Basis on the US East coast was positive with cash prices ranging from $6.87-$7.52/bu. Corn producers should probably hold off pricing any more of the 2011/12 crop at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) fell on Monday. NOV’11 soybean futures closed 19.5 ¢ /bu lower at $13.360/bu; 36.0 ¢ /bu lower than last report.

The MAR’12 contract closed at $13.540/bu; off 21.25 ¢ /bu and 59.0 ¢ /bu lower than a week ago. Exports were neutral with USDA putting soybeans-inspected-for-export at 10.007 mi bu vs. estimates for nine to 12 mi bu. China bought 6.5 mi bu and Japan bought 1.5 mi bu of US soybeans.

Around 10 mi bu were needed this week to keep on track with USDA’s demand projections of 1.415 bi bu.

Cash basis on the US East coast was negative with prices ranging from $12.92 - $13.55/bu. Soybean producers should consider pricing more of the 2011 crop at this time. Soybean users should consider pricing up to one month’s use at this time. Beans may become cheaper sooner rather than later.

WHEAT futures in Chicago (CBOT) finished down on Monday. MAR’11 futures finished 16.25 ¢ /bu lower at $7.104/bu. The DEC’11 contract closed at $6.730/bu; down 15.25 ¢ /bu and 54.25 ¢ /bu lower than last report. JULY’12 wheat futures finished at $7.392/bu; off 3.0 ¢ /bu and 47.25 ¢ /bu lower this time last week. Wheat futures fell again.

It has done so nine times out of the 10 last sessions. A firm US dollar and ample global stocks have slowed demand. USDA put wheat-inspected-for-export at 33.3 mi bu vs. estimates for 17-27 mi bu.

Nigeria bought 4.8 mi bu while Korea bought 4.5 mi bu. French port data showed exports to Cuba, Yemen, Israel, and Libya. Wheat producers should have considered priced up to 40% of the 2012 crop last week. More downward price pressure may be expected. End users should think about pricing near-to-intermediate needs at this time.