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Weekly Roberts Report

by 5m Editor
11 February 2009, at 5:32am

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech. Grains jockey for position ahead of Tuesday’s World Agriculture Supply Demand Estimate (WASDE) report while cattle gain and hogs lose ground.

LEAN HOGS on the CME were mixed on Monday with nearby’s off. The APR’09LH contract closed at $56.050/cwt; down $0.300/cwt and $3.900/cwt lower than this time last week. The JUNE’09LH contract gained $0.100/cwt to $73.050/cwt; $0.825/cwt lower than last Monday’s close. A continued weak tone to cash hogs and declining pork retail prices put pressure on futures. USDA early Monday put the pork cutout at $56.83/cwt, down $0.31/cwt. A weak tone to exports weighed on prices. The latest CME lean hog index was placed at $58.47/cwt, off $0.61/cwt. According to HedgersEdge.com, the average pork plant margin was placed at a negative $0.85/head; $9.60/head lower than last report. This was based on the average buy of $40.47/cwt vs. the average breakeven of $40.18/cwt. It won’t pay to hold hogs to heavier weights. As spring comes up hogs will convert better but higher priced corn will negate that daily gain. Sell hogs when ready.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. MAR’09 corn futures closed at $3.774/bu; up 0.25 ¢ /bu and 7.0 ¢ /bu higher than a week ago. The JULY’09 contract closed at $3.984/bu; up 0. 5 ¢ /bu and 6.0 ¢ /bu above last Monday’s finish. Drought in Argentina encouraging early short covering, a weaker US dollar, and higher crude oil prices were supportive. Exports were neutral. USDA put corn-inspected-for-export at 28.817 mi bu vs. expectations for between 28-31 mi bu. It was announced today that exports from Indonesia will be tripling for 2009. December corn futures and November soybean futures closing prices put the soy/corn ratio at 2.23:1. A ratio near 2.2:1favors corn planting while a higher ratio encourages soybean plantings. Funds bought 2,000 contracts as large speculators increased net bear positions by 16,000 lots to 43.906 contracts. Several floor sources said traders expect USDA to raise it 08/09 ending stocks estimates because of slumping demand. Midwest cash corn bids were weaker on Monday due to increased farmer selling on better futures prices. Cash corn in the US Mid-Atlantic states was steady with bids ranging 1.0 ¢ /bu -3.0 ¢ /bu higher. Fundamental strength in corn continues and is now coupled with bullish leaning non-commercial speculators. It might be a good idea to price up to 35 per cent of the 2009 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with the three nearby contracts finishing up and the rest of deferreds down. MAR’09 soybean futures closed at $10.020/bu; up 1.0 ¢ /bu and 42.75 ¢ /bu higher than a week ago. The NOV’09 contract closed at $9.430/bu; down 3.0 ¢ /bu but 18.0 ¢ /bu higher than this time last week. Nearby contracts reflected short-term worries over drought in Argentina. Profit taking late in the session pressured prices while exports were supportive. USDA placed soybeans inspected for export at 46.567 mi bu vs. expectations for between 30- 35 mi bu. China imported 33.184 mi bu of the total. Cash soybeans were steady to lower in the US Midwest while they were generally stronger in the US Mid-Atlantic states. Traders evening positions ahead of Tuesday’s USDA WASDE report combined with spillover weakness in soybean meal added additional pressure keeping futures below $10.00/bu in most contracts. The WASDE report is expected to show tightening soybean stocks. It might be a good idea to hold off pricing more of the ’09 crop at this time.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAR’09 contract closed at $5.650/bu; up 8.0 ¢ /bu and 1.5 ¢ /bu higher than this time last week. JULY’09 wheat futures finished up 8.25 ¢ /bu at $5.904/bu and 2.0- ¢ /bu higher than a week ago. Short covering, dry global weather, and good exports were supportive. USDA put wheat-inspected-for-exports at 19.048 mi bu vs. expectations for between 13-15 mi bu. Large speculators decreased net bear positions in CBOT wheat. It would be a good consideration to price up to 20 per cent of the 2009 crop at this time.

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