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Weekly Roberts Report

by 5m Editor
1 August 2007, at 8:23am

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

LEAN HOGS on the CME closed higher on Monday amid profit taking that lacked follow-through and continued buying by the funds. AUG’07LH futures closed at $73.225/cwt, up $0.450/cwt while the OCT’07LH contract closed at $73.800/cwt, up $1.250/cwt. The August contract finished $1.325/cwt lower than last Monday while the October ended $1.625/cwt higher than one week ago. The market is showing how uncertain it is over how much pork China may buy to fill reported shortages. Cash hogs were steady to weaker on Monday as pork plants dipped into the red last week. Tyson Foods, Inc. reported it would trim production from last week’s levels. The average pork packer margin for Monday was a negative $0.50/head. This was $0.25/head lower than last Friday and $8.95/head off from last Monday, according to HedgersEdge.com. USDA reported the pork carcass cutout at $74.40/cwt, up $0.08/cwt from Friday but down $1.84/cwt from last Monday. The latest CME Lean Hog Index for Monday was posted at $73.36/cwt, up $0.53/cwt. Cash sellers should try and move finished hogs as soon as they become available in this hot weather. Hopefully near term grain needs are already priced.

CORN on the Chicago Board of Trade (CBOT) closed up again on Monday. The DEC’07 corn contract broke overhead resistance today, July 23, set up by that descending wedge pattern established over the last six weeks beginning June 18. The SEPT’07 contract finished at $3.234/bu, up 2.4¢/bu from last close and 13.4¢/bu higher than last week. The DEC’07 contract, still the most active, finished at $3.400/bu, up 3.4¢/bu from Friday and 14.6¢/bu higher than last Monday. The DEC’08 contract finished at $3.902/bu, up 3.6¢/bu from Friday but only 0.09¢/bu higher than one week ago. Gains in soybeans, soybean oil, and other energy products supported corn amid forecasts for hotter, drier weather in the corn-belt. This is considered a very important time in kernel formation and hence, yields. Seen as limiting gains in corn were reports of good corn-growing weather in Europe and a decrease in the corn market there. Exports over the weekend were quiet. USDA reported 36.7 million bu of U.S. corn inspected for export amid expectations for between 32-34 million bu. Cash corn prices were getting weaker in the U.S. Midwest due to the approaching harvest of what seems so far to be the promise of a very good crop. Cash corn in the U.S. Mid-Atlantic States was steady to firm reporting opening bids for Virginia corn up to 4.0¢/bu higher than Friday’s close. The CFTC’s Commitment of Traders report from last Friday for futures and options combined showed as of last Tuesday, large speculators in bullish positions were off 6,508 lots at 248,439 contracts. Bearish large speculators registered at 112, 969 contracts, off 7,275 lots. Bullish and bearish funds were up with the bulls up 2,433 lots at 378,112 contracts and the bears up 867 lots at 11,448 contracts. Cash sellers having priced up to 50%-60% of next year’s production are in a good mood. This DEC’07 contract is showing the life I talked about last week.

SOYBEAN futures on the Chicago Board of Trade (CBOT) ended somewhat higher on Monday. The AUG’07 contract closed at $8.226/bu, up 7.2¢/bu and 6.4¢/bu higher than one week ago today. NOV’07 futures, also the most active, closed up 7.2¢/bu from Friday at $8.476/bu and 6.6¢/bu higher than last Monday’s close. Trading was generally subdued waiting on the weather amid a lack of earth shattering news. Soybeans were held up by good soybean oil prices and forecasts for hot, dry weather in the near term as the crop is now filling pods. Overall gains were limited by prospects for better weather after this dry spell and position evening by traders late in the day. Export inspections were placed at 7.537 million bu for the week ended July 26, below expectations for between 8-9 million bu. USDA met crop-condition expectations lowering the good-to-excellent rating by 3 points to 58%. Cash soybeans in the U.S. Midwest were mostly steady to firm while they were 6.0¢/bu-8.0¢/bu lower in the U.S. Mid-Atlantic States. The CFTC’s Commitment of Traders report showed, as of Friday, large speculators in bullish positions off 13,059 contracts at 137,146 lots while those in bearish positions were up 1,888 contracts at 27,058 lots. Bullish funds were up 903 contracts at 162,998 lots while funds taking bear positions were placed at 8,866 lots, up 1,368 contracts. Producers with up to 60% of the 2007 crop are in good shape. It might be a good idea to price another 10% of the ’07 crop at this time.

WHEAT futures in Chicago (CBOT) slipped on Monday. Profit taking sent SEPT’07 wheat futures 15.6¢/bu lower at $6.374/bu but remained 17.2¢/bu higher than last week at this time. The JULY’08 contract finished at $5.844/bu, off 18.2¢/bu but 16.0¢/bu higher than a week ago. Improving harvest weather and the fact that the world supply is not getting worse was seen as weighing on prices. Technically speaking, all contracts but the nearby SEPT’07 futures were considered overbought. A contract is said to be overbought with a Relative Strength Index (RSI) over 70 and oversold with an RSI under 30. Export news was good over the weekend with Iraq tendering an offer to buy at least 50,000 tonnes (1.84 million bu) and Bangladesh tendering an offer for 112,000 tonnes (4.1 million bu). USDA put U.S. wheat inspected for export last week at 17.2 million bu, above expectations for between 13-14 million bu. The CFTC Commitment of Traders report for last week showed that funds made few changes to net long positions. Opening cash wheat bids for Mid-Atlantic States producers were 2.0¢/bu-3.0¢/bu higher on Monday. Producers should consider staying priced at 70% of the ’07 crop. Pricing with call options would not be out of the question.



5m Editor