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Weekly Roberts Market Report

by 5m Editor
27 April 2011, at 7:04am

US - Differing from cattle, short-term market-ready hog supplies are still tight. However, pressure on fresh pork sales is expected to slow at meat counters because retailers are seen as generally having what they need for the grilling season.

LEAN HOGS on the CME closed down on Monday. The JUNE’11LH contract closed at $98.525/cwt; off $1.525/cwt and $2.750/cwt lower than a week ago. AUG’11LH futures closed at $99.475/cwt; down $0.775/cwt and $2.075/cwt lower than last report. Differing from cattle, short-term market-ready hog supplies are still tight. However, pressure on fresh pork sales is expected to slow at meat counters because retailers are seen as generally having what they need for the grilling season. Supporting features in the livestock pits in Chicago include traders seasonally buying June hogs and selling June cattle. That appeared to be the play on Monday as losses in hogs trailed fat cattle. This is the third consecutive decline in futures and may be a technical sign that prices will trend lower. Cash hogs traded flat to $1 higher with top hogs going from $64-$64.50/cwt; live basis. Buying will most likely back off quickly as processors have most of the hogs they need for the short week. USDA put the pork cutout at $94.98/cwt; up $0.27/cwt but $1.30/cwt lower than last report. According to HedgersEdge.com, the average packer margin was lowered $5.20/head to a negative $2.70/head based on the average buy of $69.53/cwt vs. the average breakeven of $68.53/cwt. The latest CME lean hog index was placed at $94.98; up $0.27 and $1.17 over last report.

CORN futures on the Chicago Board of Trade (CBOT) finished up on Monday. The MAY’11 contract closed at $7.624 up 25.25 ¢/bu and 10.75 ¢/bu over last week at this time. The DEC’11 contract closed at $6.814; up 16.0¢/bu and 13.25 ¢/bu higher than last report. Excessive wet weather delaying planting in the US Midwest and bullish speculators were supportive while exports were neutral to bearish due to high US corn prices. Heavy rains and storms in the eastern and southern US Midwest crop areas look to cause flooding and hold corn planting progress. Corn yields are reduced the later planting is held off. Planting after May 15 is considered late planting. USDA put the US corn crop at 9 per cent planted as of Monday, April 24, 2011. This number will most likely make the bulls run as it compares to a 23 per cent five- year planting average, 46 per cent planted this time last year, and a 13 per cent average of trader estimates. Funds were net buyers of an estimated 13,000 lots. USDA placed corn-inspected-for-export at 33.235 mi bu; 5.36 mi bu lower than last week and lower than estimates ranging from 34-38 mi bu. Fundamentals remain bullish for corn.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished mixed on Monday with nearby futures gainers and deferreds losing some price value. The MAY’11 contract closed at $13.894/bu; up 9.0 ¢/bu and 45.25 ¢/bu higher than last Monday. NOV’11 soybean futures closed even with last Friday’s close at $13.824/bu but 33.25 ¢/bu over last report. Higher corn and wheat prices had a spillover effect on soybean futures. The soybean harvest is nearly complete in South America, so soy traders are turning their attention to the US Midwest and Delta weather patterns. Wet weather in the Corn Belt is delaying field work and slowing early plantings. USDA won’t publish the soybean planting progress report until next week. Brazil announced it was harvesting a record 70.56 mi tonne (2.59 bi bu) soybean crop vs. last year’s 68.5 mi tonnes (2.52 bi bu) aided by good harvest weather. Argentina’s soybean harvest is proceeding rapidly in spite of rains plaguing some harvest areas. Argentina’s Agriculture Ministry increased its 2010/11 soybean harvest forecast to 50.4 mi tonnes (1.85 bi bu) from 50.0 mi tonnes (1.84 bi bu). Argentina is also the world’s largest exporter of soyoil and soybean meal. As of last Thursday the Argentinean government reported its soybean crop 52 per cent harvested vs. 50 per cent harvested this time last year. Funds were net buyers of 4,000 soybean futures contracts. Below is a graph of Argentinean soybean/corn production courtesy Reuters.

Fundamentally soybeans remain bullish and prices will continue to be volatile on weather concerns and fund trading.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAY’11 wheat contract closed at $8.260/bu; up 26.5 ¢/bu and 48.5 ¢/bu higher than last report. JULY’11 futures finished up 26.5 ¢/bu at $8.612/bu and 50.75 ¢/bu over last week. Floor sources said tradrs are worried about expanding wheat damage due to dry conditions in the wheat belt causing crop losses. Conditions look too wet in the north US Plains and Canada increasing worries that producers won’t plant as much wheat as previously stated intentions. Additionally, severe weather conditions in the Northern Hemisphere are adding to price volatility. Exports were not supportive due to the high price of US wheat. USDA put wheat inspected- for-export at 28.017 mi bu vs. expectations for 30-32 mi bu. Iraq bought 300,000 tonnes (11.0 mi bu) of US and Australian origin wheat in a tender issued two weeks ago. Government stocks in India fell by 35 per cent from a year earlier since beginning purchases March 15. Supplies are shrinking due to a delay in crop harvesting in the northern grain growing regions. Funds were net buyers of 4,000 wheat contracts. Weather markets are contributing to price fluctuations.