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Weekly Roberts Market Report

by 5m Editor
20 April 2011, at 8:47am

US - Mike Roberts looks at the current agricultural markets in the weekly Roberts report.

LEAN HOGS on the CME closed mixed on Monday with deferreds past August 2011 closing down an average of $0.24/cwt. The JUNE’11LH contract closed at $101.275/cwt; up $0.200/cwt. AUG’11LH futures closed at $101.550/cwt; up $0.200/cwt and $0.70/cwt higher than last report. Hogs recovered most of their earlier losses, helped by higher pork prices. USDA put the pork cutout at $96.57/cwt; up $0.57/cwt and $2.29/cwt higher than last week at this time. This is the second highest it’s been behind the record of $96.74 set in August of 2010. Lean hog futures rallied along with other commodities on the benefit of cash movement from energy to commodities. Investors saw these food-based commodities as a good investment amid declines in stocks and gains in the US dollar. Packer demand was steady-to-firm at most places trying to get ahead of the holiday demand. Some plants are planning to close operations on Good Friday while others will be closed on Monday in observance of the Easter holiday. According to HedgersEdge.com, the average packer margin was raised $1.65/head to a positive $2.50/head based on the average buy of $68.68/cwt vs. the average breakeven of $69.59/cwt. The latest CME lean hog index was placed at $93.81; up $0.59 and $2.58 over last report.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $7.516 up 9.75¢/bu but 26.0¢/bu lower than last week at this time. The DEC’11 contract closed at $6.682; up 12.25¢/bu and 11.0¢/bu over last report. Corn futures were supported by bullish fund activity and wet weather conditions seen as delaying US corn plantings amid short supplies. US grain markets receded from highs last week after funds took profits selling 10,000 lots. On Monday the market was supported by funds buying over 12,000 contracts. According to several pit sources investors will now concentrate on weather during planting season as rain and snow continue to delay early crop seedings in the US Midwest. This weather pattern is expected to continue for the next 10-14 days. Late Monday USDA released its crop progress report showing US corn seedings at 7 per cent vs. the 8 per cent five-year average and 16 per cent this time last year. Traders were expecting about an 8 per cent planting progress number. Prospects for the tightest corn stocks in the US since the 1930s are driving this corn market to record highs. Exports were neutral with USDA putting corn-inspected-for-export at 31.161 mi bu vs. expectations for 31-34 mi bu. Cash grain markets were quiet on Monday with purchasers taking a cautionary approach amid outlooks for a pickup in deliveries from farmers. They hope this will reduce cash prices at least in the short run. On the other hand, corn merchandisers are trying to buy as much corn as possible on concerns of tight supplies later in the summer. Buying in China is expected to slow due to China’s central bank once again raising the reserve requirements for the country’s banks, according to the People’s bank of China on its website Sunday. Expect prices to remain bullish and volatile on fundamentals amid technical buying and selling by large investors.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $13.442/bu; up 12.5¢/bu but 24.25¢/bu lower than last Monday. NOV’11 soybean futures closed up 9.5¢/bu at $13.492/bu but 31.0¢/bu lower than last report. Pit sources said if weather keeps delaying corn plantings more acres might be planted to soybeans. Spillover strength from corn and wheat supported soybeans. Early price action was dominated by lower stocks and Standard & Poor’s revision of the US credit outlook to negative from stable. S&P retained the US credit rating at AAA but cited the lack of progress on a US budget accord as a negative factor. Also weighing on soybeans was the higher bank reserve China imposed on its banks. This is seen as limiting prospects for US soybean exports to that country. Exports are rated steady-to-weaker as late Monday USDA put soybeans-inspected-for-export at 14.207 mi bu vs. expectations for 19-21 mi bu. Cash soybean basis was unchanged for soybeans amid steady barge freight rates. Rates were steady on a higher demand push down to the Gulf even though fuel costs are higher. Elevator prices were steady-to-firm amid sluggish farmer sales. Funds were net buyers of 4,000 soybean contracts. Fundamentally soybeans remain bullish and prices will continue to be volatile on weather concerns and large investor trading.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAY’11 wheat contract closed at $7.775/bu; up 30.75¢/bu but 20.75¢/bu lower than last report. JULY’11 futures finished up 30.75¢/bu at $8.106/bu but 21.0¢/bu lower than this time last week. Exports were supportive with USDA putting wheat-inspected-for-export at 35.705 mi bu vs. expectations for 28-32 mi bu. Gains in wheat offset selling pressure by funds on sharply lower crude oil futures and weak equities markets. Weather continues to be the story this time of year. Dry weather in the US Plains where wheat is grown continues to support wheat prices. While the US Plains struggled with lack of moisture, the US Midwest was overly wet, delaying the start of corn seeding. Late Monday USDA put the US wheat crop in good-to-excellent condition at 36 per cent; unchanged from last week but sharply lower than this time last year when the combined good-to-excellent wheat crop condition was 69 per cent. Notably, USDA raised the US wheat crop condition in poor-to-very-poor condition to 38 per cent from 36 per cent last week and 6 per cent this time last year. Meanwhile, a dry period in Britain, Germany, and France, and continued drought in China’s wheat producing areas raised concerns that global yield potential could be negatively affected. Floor sources said that traders are assessing the condition of crops in the Northern hemisphere after poor weather slashed global output last year. Weather markets are weighing in on futures now.