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Weekly Roberts Report

by 5m Editor
11 November 2009, at 6:19am

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

LEAN HOGS on the CME were higher on Monday. The DEC’09LH contract closed up $0.100/cwt at $55.800/cwt but $1.925/cwt lower than this time last week. FEB’10LH futures finished at $63.325/cwt; up $0.475/cwt but $1.275/cwt higher than last report. Falling US dollar values rallied futures when weak cash markets couldn’t attract selling interest despite the large premium of futures to the CME lean hog index. Funds were new buyers into the April 2010 contract while selling December and buying February. A couple of floor traders said that the market anticipated falling packer demand as farmers complete harvest and get more time to sell hogs. USDA on Friday put the average pork price at $58.63/cwt; down $1.03/cwt from the previous close but $0.63/cwt higher than last report. According to cold storage reports packers have enough hams in the freezer to meet all the holiday demand as demand for turkeys overcome ham demand this time of year. The latest CME lean hog index was placed at $55.32/lb; up $0.57/lb but $1.48/lb higher than last Monday. According to HedgersEdge.com, the average pork plant margin was lowered $2.20/head from last week to a positive $4.70/head. This was based on the average buy of $39.76/cwt vs. the average breakeven price of $41.51/cwt.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday rallying late in the session. DEC’09 corn futures finished at $3.860/bu; up 19.0¢/bu and 3.75+¢/bu higher than last Monday. The MAY’10 contract closed at $4.102; up 19.25¢/bu and 5.75¢/bu higher than last report. The tremendously weak US dollar; gains in crude oil, gold, and the Dow; and fund buying provided support near the close. The US dollar has not been near the .75 index since 15 months ago. Late Monday USDA put the US corn crop at 37 per cent harvested vs. the 5-year average of 82 per cent. USDA placed corn-inspected-for-export at 26.852 mi bu vs. estimates between 25-32 mi bu. The World Agriculture Supply & Demand Estimate (WASDE) is due out tomorrow and many are thinking USDA will lower the corn production yield estimate due to the bad weather. A quickening harvest pace held futures in check all day. In other news China is sending signals for more corn imports and dry weather in Argentina is not helping corn planting in that country. Cash corn bids were weak amid heavy corn harvest this week. Funds bought between 8,000 – 9,000 contracts. The carry is weakening so unless your storage costs are less than 24.0¢/bu now is a good time to consider selling the rest of the ’09 corn crop and sell 10 per cent of the ‘10 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. NOV’09 soybean futures closed at $9.642/bu; up 16.25¢/bu but 33.25¢/bu lower than this time last week. The MAR’10 soybean contract closed at $9.780/bu; up 17.25¢/bu but 22.00¢/bu cents under last report. The falling dollar, good export reports, gains in outside markets, and fund buying countered the bearish impact of much better harvest weather. USDA placed soybeans-inspected-for-export at 59.939 mi bu vs. estimates of 45-55 mi bu. Late Monday USDA put the amount of US soybeans harvested at 75 per cent vs. the 5-year average of 92 per cent this time of year. Heavy rains flooded newly planted soybean fields in Brazil’s Matto-Grasso area. It is expected that USDA will slightly increase its soybean crop estimates in Tuesday’s WASDE report. Funds bought over 4,000 contracts. Cash soybeans weakened amid a good harvest pace last week. Basis is expected to weaken further as Hurricane Ida aims for the Gulf coast area and backs up ships. The carry does not justify holding onto soybeans unless you can store for less that 24.0¢/bu through March. Hopefully 90 per cent of the soybean crop was sold through last week. It would be a good idea to consider selling 10 per cent of the ’10 crop at this time.

WHEAT futures in Chicago (CBOT) finished up on Monday. DEC’09 futures closed at $5.200/bu; up 22.75¢/bu and 3.5¢/bu higher than a week ago. The JULY’10 wheat contract closed at $5.652/bu; up 23.5¢/bu and 5.75+¢/bu higher than last report. Rising corn and soybeans; strong exports; the falling dollar; fund buying; and stronger outside markets (crude, gold) were very supportive. USDA put wheat-inspected-for-export at 17.230 mi bu vs. estimates for 13-17 mi bu. Bangladesh, Jordan, Taiwan, and Saudi Arabia tendered offers. Lower wheat yield estimates in Canada and Bulgaria were also supportive. Funds bought almost 4,000 contracts. Pricing again would be advisable on these technical bounces.

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