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Weekly Roberts Market Report

by 5m Editor
19 October 2011, at 8:06am

US - Dairy and live cattle futures finished up on Monday whereas soybean finished down and corn and wheat futures finished mixed, writes Michael T. Roberts.

LEAN HOGS on the CME closed up on Monday with the exception of the May 2012 and June 2012 contracts. The DEC’11LH contract closed at $90.700/cwt; up $0.625/cwt and $2.950/cwt over last report.

MAY’12LH futures closed at $98.900/cwt; off $0.200/cwt but $o.550/cwt higher than a week ago. Hog futures were supported by news that Congress had passed free trade agreements with Panama, Colombia, and South Korea. Pit sources agree that these agreements hold a lot of promise for increased exports.

USDA on Monday put the lean hog carcass price at $99.06; up $0.35. According to HedgersEdge.com, the average packer margin was raised $4.35/hd from last report to a positive $6.35/head based on the average buy of $68.80/cwt vs. the average breakeven of $71.17/cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday. The DEC’11 contract closed at $6.404/bu; up 0.5 ¢ /bu and 35.5 ¢ /bu over a week ago.

MAR’12 futures closed at $6.512/bu; down 0.25 ¢ /bu but 33.75 ¢ /bu higher than this time last week. The DEC’12 contract closed up 1.5 ¢ /bu at $6.032/bu and 31.0 ¢ /bu higher than a week ago.

A firm US dollar kept prices stable, and chart resistance kept prices in check. Late Monday USDA put the US corn harvest at 47 per cent complete vs. the five-year average of 41 per cent for this time of year.

Export news lagged. USDA on Monday said it wouldn’t release corn-inspected-for-export numbers until Tuesday 10/18. Industry estimates range from 30 to 38 mi bu. USDA last week reduced supply / demand estimates by 64 mi bu due to reduced planted and harvested acres; 91.9 mi ac and 83.9 mi ac respectively.

Yield estimates remained unchanged at 148.1 bu/ac. U.S. corn use was reduced by 50 mi bu. Total US corn production was put at 12.433 bi bu. Ending stocks were placed at 8.6 mi bu, an increase of 194 mi bu from the September 2011 estimate.

Corn prices show downward price trend in the short run as funds and large speculators take profits on short covering and long-liquidation.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. NOV’11 soybean futures closed 17.0 ¢ /bu lower at $12.530/bu but 75.75 ¢ /bu over a week ago.

The MAR’12 contract closed at $12.676/bu; off 18.0 ¢ /bu but 70.0 ¢ /bu higher than this time last week. News that the troublesome kudzu bug that eats kudzu, as well as soybeans, is invading southern soybean fields was supportive.

University of Georgia researchers say the voracious pest is adaptable and is spreading both north and west. A firm dollar, higher crude oil, short covering, and long liquidation in profit taking weighed on prices. Lack of confirmation that China purchased large quantities of US soybeans also contributed to Monday’s price weakness.

USDA placed the US soybean harvest at 69 per cent vs. the five-year average of 61 per cent and 81 per cent this time last year.

Showers this week should slow the US soybean harvest. Analysts expect soybean exports to come in at 35-40 mi bu. USDA will publish those figures on Tuesday, 11/18. Last week USDA reduced harvested US soybean acres 0.1 mi ac to 73.7 mi ac and also reduced the US yield estimate for soybeans to 41.5 mi bu/ac.

This resulted in an estimate of 3.060 bi bu; 25 mi bu less than the September forecast. Ending stocks were reduced five mi bu to 160 mi bu. Technical signals show upside potential and those should materialise if export news is positive from China.

WHEAT futures in Chicago (CBOT) closed mixed on Monday. The DEC’11 contract closed at $6.242/bu; up 1.5 ¢ /bu and 12.75 ¢ /bu higher than last report.

JULY’12 wheat futures finished at $6.966/bu; down 0.5 ¢ /bu but 13.75 ¢ /bu higher than this time last week. Forecasts for dry weather were supportive.

A firm US dollar limited prices. Export estimates ranged from 16-21 mi bu. USDA’s export report normally released on Monday’s at 11:00 am EST was delayed until Tuesday. There is upside potential in the short run.