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Weekly Roberts Report

by 5m Editor
28 January 2009, at 12:43am

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech. Weather markets in Argentina and a softening economy are pressuring prices.

LEAN HOGS on the CME were down on Monday. FEB’09 futures closed down $0.925/cwt at $58.000/cwt. The APR’09LH contract closed at $62.775/cwt; down $1.625/cwt. The JUNE’09LH contract dropped $0.850/cwt to $74.900/cwt. A soft economy and fund selling on technical signs pressured the market. As money left fund pockets and month end balancing occurred money left lean hogs. Fundamentally there was also bearish pressure from the Cold Storage report. USDA put 20 per cent more pork in the freezer than this time last year and it needs sold! This is a record high for this date indicating very sluggish US and foreign sales. USDA lowered the pork cutout by $0.32/cwt to $57.81/cwt last Friday. The latest CME Lean Hog Index was placed at $58.70/cwt, up $0.06/cwt. Expect cash hog prices to weaken as packers try to get a handle on things. According to HedgersEdge.com, the average pork plant margin was placed at a negative $8.05/head; $7.75/head lower than last report. This was based on the average buy of $43.88/cwt vs. the average breakeven of $40.90/cwt. Hopefully a couple months’ feed needs were bought on last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up somewhat on Monday. MAR’09 corn futures closed at $3.936/bu; up 3.25 ¢ /bu. The JULY’09 contract closed at $4.152/bu; up 3.2 ¢ /bu. Continued dry weather in Argentina and some fund buying were supportive factors while concerns for questionable demand expectations and a down-turn in the US stock market weighed on the prices. Weather forecasts did call for some moisture in Argentina limiting gains. Lack of technical strength is a contributing factor keeping corn under the $4.00/bu mark. Funds bought between 3,000-4,000 contracts while cutting net bear positions by about 7,000 lots. It might be a good idea to wait and see where these prices are headed before pricing any more of the 2009 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed near even on Monday. MAR’09 soybean futures closed at $10.090/bu; near even with last close. The NOV’09 contract closed at $9.454/bu; up 2.25 ¢ /bu. Forecasts for better weather in Argentina rocked the markets today. Dry weather and fund buying catalyzed prices at the start of trading but that quickly faded. Fund positions were near unchanged with the CFTC reporting some funds cutting net bull positions in CBOT soybeans. Producers did not seem to be turning loose of many beans. USDA placed soybeans-inspected-for-export at 37.390 mi bu vs. expectations for between 23-35 mi bu. China bought 31 mi bu. It might be a good idea to price binned soybeans on upticks.

WHEAT futures in Chicago (CBOT) were up on Monday. The MAR’09 contract closed at $5.924/bu; up 9.75 ¢ /bu. JULY’09 wheat futures were up 10.0 ¢ /bu at $6.162/bu. Gains were influenced by expectations for improved demand on events in Argentina. The Argentinean government was reportedly blocking exports to protect food supplies amidst an ongoing drought. In other news Nigeria cancelled a large order while South Africa made a move to lower its wheat import tax by 2 per cent and Iraq announced plans for a tender to purchase enough wheat to make it through June 2009. Russian cash wheat made gains while Israel tendered an offer to buy 25,000 tonnes (918,600 bu) of feed wheat. Cold weather was not seen as a problem for US Plains wheat. The CFTC Commodity Traders Report showed funds buying 3,000 contracts while large speculators increased net short positions in CBOT wheat by about 9,200 lots. It would be a good consideration to hold off pricing any more wheat.

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