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Weekly Roberts Market Report

by 5m Editor
7 December 2011, at 7:11am

US - It has been noted that competition from Australian wheat is not good enough for bread, but good enough for livestock, writes Michael T. Roberts in his Weekly Roberts Agricultural Commodity Market Report for 6 December.

LEAN HOGS on the CME closed down on Monday. The DEC’11LH contract closed at $85.300/cwt; down $0.950/cwt. MAY’12LH futures closed at $97.600/cwt; down $0.800/cwt.

Weakening fundamentals and easing pork demand weighed on prices. Floor sources said traders are concerned that a seasonal period of strength in prices has run its course ahead of schedule, especially as processor finish filling holiday wholesale orders.

USDA put the wholesale pork price at $88.93/cwt; down $0.33/cwt. According to HedgersEdge.com, the average packer margin was placed at a positive $3.00/head based on the average buy of $62.62/cwt vs. the average breakeven of $63.70/cwt.

The CME lean hog index for Monday, 12/05/11 was placed at $86.22; down $0.10.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys down and deferreds from December 2012 and beyond closing up. The DEC’11 contract closed at $5.802/bu; down 6.25¢/bu. MAR’12 futures closed at $5.910/bu; off 4.25¢/bu. The DEC’12 contract closed up 0.5¢/bu at $5.536/bu.

A firm US dollar, increasing prospects for Chinese corn crop while good prospective corn crop production in Argentina and Brazil also pressured prices. Competition from Australian wheat not good enough for bread but good enough for livestock is noted. Funds cut net bull positions in CBOT corn to a 17-month low last week.

Exports were supportive with USDA putting corn-inspected-for-export at 38.546 mi bu vs. estimates for 30-35 mi bu. Looks like a reversed head-and-shoulders shows

December 2012 corn bottoming out while showing rising tendancies to make the upside slope of the right side of the head formation. Upside potential is near $1.50/bu in the near term.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. JAN’11 soybean futures closed 9.5¢/bu lower at $11.262/bu. The MAR’12 contract closed at $11.364/bu; off 9.75¢/bu. NOV’12 futures closed at $11.484/bu; down 6.0¢/bu.

A firm US dollar buoyed by Eurozone economic woes and good prospects for the South American soybean crops pressured prices. Large speculators trimmed net bear positions decreasing exposure to volatility in the grain markets.

Exports were bearish with USDA putting soybeans-inspected-for-export at 31.649 mi bu vs. estimates for 40-45 mi bu. November 2012 soybean futures show confidence in higher prices for the 2012 crop.

WHEAT futures in Chicago (CBOT) closed down on Monday. The DEC’11 contract closed at $5.986/bu; off 13.5¢/bu. JULY’12 wheat futures finished at $6.424/bu; down 11.75¢/bu. Wheat lost early gains after losing support from outside markets.

Weak fundamentals left wheat exposed to US dollar volatility. Exports were not supportive with USDA putting wheat-inspected-for-export at 14.497 mi bu vs. estimates for 15-20 mi bu.

World demand was weak however, Saudi Arabia and Iraq did post substantial tenders for 2012 wheat. Chart signals indicate upside potential in July 2012 wheat.