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Weekly Roberts Report

by 5m Editor
13 June 2007, at 8:30am

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.

LEAN HOGS on the CME closed mixed on Monday. In light trading ahead of its expiration date the JUNE’07LH contract finished at $72.675/cwt, off $0.200cwt and $1.650/cwt lower than last Monday. JULY’07LH futures was again the most actively traded. It closed at $74.40/cwt, up $0.650/cwt but $0.975/cwt lower than a week ago. Hogs found support amid expectations for better pork sales and prices ahead of the July 4th holiday. On Monday, USDA showed April pork exports decreasing by 14.1% ever as Mexico’s exports were off 65% from a year ago. In addition, April pork imports were up 7.2% with imports from Canada up 13.2% from last year. As of Friday, USDA’s pork-carcass-cutout data was placed at $72.89/cwt, off $0.34/cwt. The CME Lean Hog Index was off $0.39/cwt at $73.39/lb. The average pork plant margin for Monday was a negative $0.50/head, down $0.30/head from Friday and of $1.10/head from last week at this time. Cash sellers should continue to keep hog sales current. Hog feeders should not price grain inputs at this time as you have hopefully priced them on last week’s advice.

CORN on the Chicago Board of Trade (CBOT) closed strong on Monday. The July’07 contract again was the most active finishing at $3.960/bu, up 14.0¢/bu and 12.2¢/bu higher than last week. The DEC’07 contract finished at $4.060/bu, up 13.6¢/bu from Friday and 25.0¢/bu higher than last Monday’s close. The DEC’08 contract finished at $4.164/bu, up 9.6¢/bu from Friday and 19.2¢/bu higher than last week. USDA published the World Agriculture Supple Demand Estimates (WASDE) this morning and is viewed as somewhat bearish for corn. No changes in production or use were noted. Corn yield also remained unchanged at 150.3 bu/ac. Corn ending stocks for are now projected at 997 million, up 50 million from last month because exports were lowered by that same amount. Correspondingly, ending stocks for ‘06/’07 corn were raised 50 million bu. Exports were lowered in large part by more expected competition from larger supplies in Argentina, China expecting to a gradual shift away from corn as the main input for its four authorized ethanol plants, and South Korea’s desire to use only non-genetically modified products. One bright note is that Japan and Taiwan are expected to seek increased grain shipments as freight rates fall. Corn price projection for old-crop corn was lowered 10.0¢/bu on the upper end of the range to $3.00-$3.10/bu. Weather market concerns include outlooks for hot, dry weather in the U.S. crop region and may override any underlying bearish influences. Cash corn in the U.S. Midwest was steady Monday while cash bids for corn in the Mid-Atlantic States were 5.0¢/bu–10.0¢/bu weaker. Cash sellers should have considered pricing up to 40%-50% of next year’s production on previous advice keeping the rest to speculate with. It’s a very good time to do so … today.

SOYBEAN futures on the Chicago Board of Trade (CBOT) ended mostly lower on Monday. The JULY’07 contract closed at $8.300/bu, up 8.4¢/bu. NOV’07 futures also closed up 9.0¢/bu from Friday at $8.634/bu. Soybean production, trade, and ending stocks projections remain unchanged with ‘07/’08 ending stocks at 320 million bu, down almost 50% from ‘06/’07. Returns to biodiesel production have become less favorable because of higher vegetable oil prices. The U.S. season-average price for soybeans was raised 15.0¢/bu on both ends of the range to $6.65/bu-$7.65/bu. The price range was raised because of higher-than-expected forward pricing opportunities in recent weeks and stronger oil prices. The CBOT lowered initial trading margin for soybeans from $1,350.00/lot to $1,251.00/lot. Additionally, global oilseed production for the ‘07/’08 crop was placed at 399 million tons (14.67 billion bu). If this happens, it would be the first year-to-year decline in global oilseed production since ‘95/’96. Most of the decreased production is from the U.S. Both Brazil and Argentina (despite more corn acres in AR) are expected to produce new record crops on increased acres. Cash bids for soybeans in the U.S. Midwest early on Monday were firm while opening bids for soybeans in the U.S. Mid-Atlantic states were reported 10.0¢/bu–15.0¢/bu lower. It might be a good idea to get up to 60% of the 2007 crop priced.

WHEAT futures in Chicago (CBOT) gapped higher on Monday. JULY’07 wheat futures finished up 28.4¢/bu at $5.556/bu. This is 30.4¢/bu higher than last week and a whopping 71.2¢/bu higher than just three weeks ago! On Monday, USDA released its WASDE report. Viewed as very bullish, USDA lowered ending stocks to 26 million bu because of higher exports and lower production expectations. This will more than compensate for the small increase in carryin. Production was lowered by 6 million bu while carryin was raised 5 million bu. The carryin number was raised primarily because of an increase in imports. However, exports were stronger by 25 million bu because of production shortfalls in major exporting countries. Global ending stocks are projected to be down 8% from ‘06/’07, their lowest levels in 30 years! The ‘07/’08 marketing year average farm price is now projected at $4.50/bu-$5.10/bu, up 15.0¢/bu on each end of the range. The ’06/’07 price forecast was left unchanged at $4.27/bu. Opening bids for wheat in the U.S. Mid-Atlantic States were 3.0¢/bu -5.0¢/bu early on Monday. This week should be a very good opportunity for producers to price up to 50% of the new crop and sell any stored wheat from last year.



5m Editor