Weekly Roberts Market Report

by 5m Editor
18 April 2012, at 7:00am

US - Corn futures were pressured by profit-taking via non-commercial liquidation, short-covering, and forecasts for improved crop-planting weather, writes Michael T. Roberts.

LEAN HOGS on the CME finished down on Monday. The APR’12LH contract closed at $82.300/cwt; down $0.450/cwt and $2.125/cwt lower than last Monday. MAY’12LH futures closed at $88.550/cwt; off $1.575/cwt and $5.45/cwt lower than this time last week. AUG’12LH futures finished $0.850/cwt higher at $90.150/cwt and $4.050/cwt lower than last report. Futures slumped on missing seasonal demand and the low discount-to-cash index. The spot April contract expired today. Cash volume was slow amid light demand and few offerings. Cash hogs were called steady-to-$0.50/cwt lower. Processors continue the dance with pork demand and negative margins. USDA put the pork carcass cutout at $77.84/cwt, up $0.84/cwt but $0.70/cwt lower than a week ago. For Monday, April 16 USDA placed hogs processing at 413,000 head vs. 274,000 last week and 391,000 a year ago. According to, the average packer margin was raised $2.70/hd to a negative $13.30/head based on the average buy of $59.91/cwt vs. the breakeven of $56.11/cwt. The latest CME lean hog index was estimated at 82.64; up 0.14; and 0.02 over last report.

This table shows the maximum price a producer could pay for hogs and still break even, assuming the costs and conversion/performance factors listed above. While these assumptions are continually reviewed and updated producers should remain aware that calculations are based on averages, totals that may or may not reflect the feeding realities of specific operations. In short, this table produces general margin guidelines only that must be fine-tuned according to individual situations. Courtesy DTN.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’12 contract closed at $6.132/bu; off 7.5¢/bu and 28.0¢/bu lower than last Monday’s close. The DEC’12 contract closed at $5.262/bu; off 10.75¢/bu and 24.0¢/bu lower than last report. Corn futures were pressured by profit-taking via non-commercial liquidation, short-covering, and forecasts for improved crop-planting weather. The USDA crop-production report (usually out on Monday) will be delayed until Tuesday due to a small fire in USDA electrical equipment. Corn exports were bullish with USDA putting corn-inspected-for-export at 42.875 mi bu vs. estimates for 25-30 mi bu. See chart.

US corn plantings remain ahead of schedule with weather encouraging early corn planting. This could ease worries over tight supplies if harvested corn hits the market earlier than normal next fall. Fundamentally, expectations for a large US crop amid a lack of fresh news weighed on prices. Cash corn prices have remained steady-to-strong as farmers hold onto old crop supplies while buyers are pushing for immediate shipment of deliveries at the same time remaining hesitant to over-extend themselves in today’s market.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The MAY’12 contract closed at $14.200/bu; down 16.75¢/bu and 11.0¢/bu lower than last report. NOV’12 futures closed at $13.500/bu; down 11.75¢/bu but 30.0¢/bu higher than a week ago. Traders with bullish sentiments are more nervous after today’s sharp losses. Profit –taking by non-commercials and short covering by hedgers pressured prices. Speculative traders and funds are holding their largest long and net-long positions on record and the market may be due for a correction. With corn being planted so early pit sources tell me that traders are thinking an increase in soybean supplies may be in the offing therefore a market correction lower is not far off. With the inverse in the November-to-January spread replaced by a weak carry and the inverses in the January-to-March and March-to-May weakening, the market may be in for a larger correction than anticipated. Exports were bearish with USDA putting soybeans-inspected-for-export at 18.065 mi bu vs. estimates for 25-30 mi bu. Over 30 mi bu were needed this week to get back on pace with USDA’s export projections. See chart.

USDA’s crop production report usually out Monday afternoon was delayed. This report should shed some light on farmer intentions.

WHEAT futures in Chicago (CBOT) closed down on Monday. The MAY’12 contract closed at $6.162/bu; off 7.25¢/bu and 26.75¢/bu lower than this time last Monday. JULY’12 wheat futures finished at $6.212/bu; down 9.0¢/bu and 27.75¢/bu lower than a week ago. Commercial selling on profit-taking was noted despite wind and hail damage to a portion of the US winter wheat crop. Traders are not convinced enough damage was done to lower crop production estimates. Heavy rains in the US helped to recharge soil moisture. A strong carry in new-crop spreads seems to show bearish long-term fundamentals. Exports were bullish with USDA putting wheat-inspected-for-export at 25.745 mi bu vs. estimates for 16-21 mi bu. Global supplies are expected to remain relatively stable even with the European Union (EU) winterkill and drought.

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