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Weekly Roberts Market Report

by 5m Editor
25 January 2012, at 7:51am

US - China has suspended imports of soybean oilmeal from India after finding contamination in rapeseed last year, writes Michael T. Roberts.

LEAN HOGS on the CME closed up on Monday on short covering and spillover from other commodities.. The FEB’12LH contract closed at $86.475/cwt; up $1.150/cwt. MAY’12LH futures closed at $96.250/cwt; up $0.800/cwt. AUG’12LH futures finished up $0.75/cwt at $96.700/cwt. Futures rallied Monday on thinking that prices have bottomed. Floor sources are optimistic about prices. Futures were supported by last week’s broad rise in wholesale pork prices. Wholesale USDA pork prices rose $1.79 during the week, including a gain of $0.87 Friday. Cash hogs were mostly steady. Monday USDA put pork carcass cutout at $85.27/cwt; down $0.37/cwt from Friday. The latest CME lean hog index for Monday, 1/23/12 was placed at $85.39; up $0.12.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. MAR’12 futures closed at $6.200/bu; up 8.5¢/bu. The DEC’12 contract closed up 4.5¢/bu at $5.562/bu. Slower-than-expected moisture counts in South America, higher cash markets, and a weaker U.S. dollar were supportive. The larger-than-expected supply forecast last week cast a bearish tone over the market. However, most marketers and traders don’t really expect the report to hold up. Exports were neutral with USDA putting corn-inspected-for-export at 35.198 mi bu vs. estimates of 32-38 mi bu. Exports were up 5 mi bu over last week. Slow farmer sales have cash markets soaring. Farmers are holding back waiting on a return to higher prices. According to several floor sources in Chicago and a dozen merchandisers across the Corn Belt the cash market is very hot right now. Exporters are snapping up supplies to meet international demand. It might be a good idea to buy some near-to-medium term supplies before the end of the week.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The MAR’12 contract closed at $12.174/bu; up 30.5¢/bu. NOV’12 futures closed at $12.074/bu; up 23.75¢/bu. Worries over harsh weather in Argentina, brisk cash sales, and weak dollar were supportive. Exports were neutral at 35.666 mi bu vs. estimates for 33-39 mi bu. Disappointing rainfall in Argentina leaving over one-third of the corn and soybean producing area is hurting South American supply. Argentina is the world’s third largest exporter of soybeans and the largest exporter of soymeal and soyoil.


Loading Soymeal in Rosario, Argentina

Another international demand element factoring into higher prices is that China has suspended imports of soybean oilmeal from India after finding contamination in rapeseed last year. The dollar fell against a number of currencies, with the euro hitting a near three-week high. Several floor sources said the weaker dollar was really driving prices. A weaker dollar makes commodities priced in U.S. currency more attractive to exporters.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAR’12 contract closed at $6.196/bu; up 9.25¢/bu. JULY’12 wheat futures finished at $6.542/bu; up 10.5¢/bu. Positive momentum from last week and a weaker U.S. dollar making wheat more competitive in global markets was supportive. However, global wheat stocks are the highest in more than a decade weighing on prices. Exports were neutral with USDA putting wheat-inspected-for-export at 17.106 mi bu vs. estimates for 15-20 mi bu. Chart signals continue to indicate speculators may be interested in buying wheat futures soon. All it will take is a global trigger to indicate supply will be removed more quickly than is thought now.