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Weekly Roberts Market Report

by 5m Editor
21 March 2012, at 6:13am

US - The threat of cold weather harming the US corn crop is now considered nil by many meteorologists, writes Michael T. Roberts.

LEAN HOGS on the CME finished up on Monday. The APR’12LH contract closed at $86.025/cwt; up $0.150/cwt. MAY’12LH futures closed at $94.450/cwt; up $0.050/cwt. AUG’12LH futures finished $0.055/cwt higher at $94.850/cwt. According to pit reports speculative buyers are being drawn to the discount to the CME’s lean hog index. Cash hogs are firm even though packers are losing money. USDA late Monday put the average wholesale pork price at $82.29/cwt; down $0.41/cwt. According to HedgersEdge.com, the average packer margin was lowered $2.25/hd to a negative $12.00/head based on the average buy of $63.68/cwt vs. the breakeven of $59.32/cwt. Late Monday the CME lean hog index was estimated at $87.98; down 0.18.

CORN futures on the Chicago Board fo Trade (CBOT) closed down on Monday. The JULY’12 contract closed at $6.634/bu; down 9.5¢/bu. The DEC’12 contract closed at $5.702/bu; off 4.0¢/bu. Futures were pressured by profit-taking and prospects for an early start to US corn plantings. The potential for a record large crop may be in the making. The threat of cold weather harming the US corn crop now is considered nill by many meteorologists. Exports were weak and considered bearish for market news. USDA put corn-inspected-for-export at 23.195 mi bu vs. trade estimates for 30-35 mi bu. Backing off bullish buying last week funds sold an estimated 10,000 lots on Monday. Hopefully some of the 2012 and 2013 crop have been sold at these prices. Corn prices will most likely be pressured lower unless drought of other natural disasters set up a lower supply situation.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The MAY’12 contract closed at $13.664¢/bu; off 7.5¢/bu. NOV’12 futures closed at $13.254/bu; down 2.75¢/bu. Soybeans reversed to close lower on profit-taking. Concerns about a crop shortfall in South America started the market out well on the opening bell. In Argentina grain truckers called an indefinite strike on Monday to demand higher pay rates on soybean hauling. This kept South America beans off the world market. However, US exports were considered weak as USDA put soybeans-inspected-for-export at 23.732 mi bu vs. trade estimates for 30-35 mi bu. Soybeans are over bought at this time with the November 2012 contract posting a 75.62 Relative Strength Index (RSI). A contract is considered over-bought with an RSI greater than 70 and over-sold with and RSI lower than 35. Over-bought contracts indicate mounting pressure to sell. Unseasonably warm weather seen as boosting the US crop prospects also weighed on the market. Funds sold an estimated 3,000 contracts which was more than offset by large speculators buying over 17,000 lots. Now would be a very, very good time to get up to 40 per cent of the 2012 crop priced.

WHEAT futures in Chicago (CBOT) closed lower on Monday. The MAY’2012 contract closed at $6.552/bu; down 29.75¢/bu. JULY’12 wheat futures finished at $6.610/bu; down 16.25¢/bu. Wheat futures were pressured by profit taking and outlook for good crop weather in the US winter wheat growing areas. Pakistan will export a million tonnes of wheat to Iran in a barter deal. Western sanctions over Tehran’s nuclear program squeeze its ability to pay for food imports. Still, US exports are not expected to gain much of the global market share as Russia announced Monday it would not limit exports again this year. USDA put wheat-inspected-for-export at 20.982 mi bu vs. trade estimates for 25-30 mi bu. After increasing net-short positions in CBOT week last week funds sold an estimated 3,000 lots on Monday. It would be worth considering pricing more of the 2012 wheat crop at this time.