Weekly Roberts Market Report

US - My field crops tour of the Northern US Plains started this week, writes Michael T. Roberts.
calendar icon 22 May 2013
clock icon 7 minute read

North Carolina corn looks like it is all planted. WV fields were unworked; Ohio fields were way behind planting; southern Illinois fields were just getting worked; and north Illinois looked planted. Minnesota fields were wet but farmers were trying to put corn seed in the ground. Fargo, ND farmers were just waiting on the rain to quit and the flooding to stop. No corn was planted much. Summary: from what I saw the last three days the nation’s corn belt is not 71 per cent per cent planted as the last USDA crop progress report indicated. My guess is more like 50 per cent planted under good conditions and 15 per cent more planted in much too wet conditions and cold soil temperatures that will most likely require replanting of soybeans. I would downgrade the crop progress and potential yield by as much as 15 per cent as of this writing.

Southern Ohio – very little corn planted

Still raining over southern Illinois fields

This middle IL field was disked but not planted

This northern Illinois farmer was discing

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearby’s down in position squaring before the month is out. The JULY’13 contract closed at $6.494/bu; down 3.25¢/bu. SEP’13 corn futures closed at $5.544/bu; down 1.5¢/bu. The DEC’13 contract closed at $5.202/bu; up 0.75¢/bu. Weather continues to add to planting delays. Hedgers are taking advantage of short covering to put floors under their crops. Some are still cash speculating. Funds are still bullish on corn. Exports were bearish with USDA putting corn-inspected-for-export at 14.557 mb vs. estimates for 7-12. One might ask how this could be bearish but the sad truth is that 15.5 mb were needed this week to stay on pace with the USDA export demand projection of 750 mb. Please see chart:

Corn prices are in a downward channel trend due to weather uncertainty. However, local basis has strengthened. Farmers should consider selling old crop corn if they have cost of production covered. The national average basis for corn firmed to +32.0¢/bu over CBOT July futures.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday. The JULY’13 contract closed at $14.644/bu; up 16.0¢/bu. NOV’13 futures closed at $12.250/bu; down 3.25¢/bu. Soybean growers also are behind planting schedule, having planted 24 per cent of the crop as of Sunday, up from 18 per cent a week ago and below the five-year average of 41 per cent, according to USDA. Hedge covering and position squaring ahead of the month’s end was noted. Wet weather slowing corn plantings are expected to push soybean acres into production. Exports are viewed as bearish with USDA putting soybeans-inspected-for-export at 3.328 mb vs. estimates for 2-8 mb. This was below the 5.9 mb needed to stay on pace with USDA’s export demand projection of 1.35 bb. Please see chart:

Cash soybean prices were weakened with the latest national average soybean basis placed at +42.0¢/bu over CBOT July futures.

WHEAT futures in Chicago (CBOT) closed up Monday. The JULY’13 contract closed at $6.852/bu; up 2.0¢/bu DEC’13 futures closed up 1.0¢/bu $7.084/bu. Challenges remain for US wheat production in 2013 with drought hurting the hard red winter wheat crop in the Southern Plains and rain in the north-central states adding to spring wheat planting delays and to flooding problems in easterh North Dakota. In addition, more comfortable global wheat supplies and expectations for increased wheat production outside the USin 2013 are good reasons to have kept wheat prices in check. USDA put wheat-inspected-for-export at 21.149 mb vs. estimates of 15-23 mb. Wheat basis for Monday for Soft Red Winter Wheat was put at -23¢/bu cents under July futures contract; Hard Red Winter Wheat: -22¢/bu under Kansas City July futures and Hard Red Spring Wheat -31¢/bu under July Minneapolis July futures.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday. MAY’13DA futures closed at $18.94/cwt; even with Friday’s close. The JULY’13DA contract closed at $19.40/cwt; even with Friday’s close. NOV’13 futures closed at $19.11/cwt; down $0.04/cwt.

This great looking dairy in northern Minnesota had baylage put up but no silage. Corn stubble was still in the field and seed corn wasn’t drilled as of May 20. The producer said he would be hurting if he had to buyhis feed with over 1000 acres he couldn’t plant to corn. He would have no choice but to plant soybeans next week or so. Milk spring flush does not seem to be unfolding with reformulated rations keeping production at a steady pace. Even so, milk production remains strong. Milk production is up 3 per cent in April in the top 0.3 per cent milk producing states and up .2 per cent for the US after two months of lower production compared to the previous year. Class III futures are: 3 months out = $18.49/cwt; 6 months out = $18.73/cwt; 9 months out = $18.50/cwt); and 12 months out = $18.18/cwt.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed up on Monday. JUN’13LC futures closed at $120.125/cwt; up $0.725/cwt. The AUG’13LC contract closed at $119.150/cwt; up $0.600/cwt. The FEB’14LC contract closed at $125.250/cwt; up $0.450/cwt. Live cattle futures finished higher Monday, bouncing back fom a sharp decline last Friday. Some traders think the market could pass a seasonal peak in beef demand which propped up nearby futures Monday. Cattle markets slumpe last week as market participants braced for potential drop in demand following the holiday spike in demand. USDA reported the number of young cattle entering the nation’s feedyard in April rose 15 per cent from the same time a year ago. The markets are oversold technically. USDA put boxed beef prices at $210.04/cwt.
USDA put the 5-area average price on Monday at $125.35/cwt. Please see chart:

FEEDER CATTLE at the CME finished up on Monday. MAY’13FC futures closed at $132.525/cwt; down $1.375/cwt. The AUG’13FC contract closed at $144.475/cwt; off $1.100/cwt. NOV’13FC futures closed at $150.050/cwt; off $0.850/cwt. The CME estimated Feeder Cattle Index for Monday 21, 2013 is placed at 131.98. Please see chart:

This table shows the maximum price a producer could pay for feeder cattle and still break even, assuming the costs and conversion/performance factors listed above. Producers should remain aware that calculations are based on averages. Courtesy DTN.

LEAN HOGS on the CME closed up on Monday. JUN’13LH futures closed at $97.075/cwt; up $0.550/cwt. The JUL’13LH contract closed at $91.525/cwt; up $0.550/cwt. OCT’13LH futures closed at $81.075/cwt; up $0.775/cwt. Thoughts that supplies will tighten have bolstered demand. Hog prices have been climbing for several weeks now. A disease outbreak of epidemic diarrhear in young pigs in Iowa also supported slowing supplies. Many traders said it wouldn’t make a difference however since this virus is manageable. Cash hog prices were steady-to-firm across the USUSDA put the 93.98,down 0.10. Lackluster demand is expected to pick up toward the Memorial Holiday. The projected CME two-day lean hog index, calculated using USDA market data at 93.18 cents a pound; 0.29/lb.

This table shows the maximum price a producer could pay for feeder pigs and still break even, assuming the costs and conversion/performance factors listed above. Producers should remain aware that calculations are based on averages. Courtesy DTN.

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