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Weekly Roberts Market Report

by 5m Editor
1 September 2011, at 6:15am

US - This report comes to you from the hurricane, earthquake, and fire centre of Virginia where there is no power and the internet is spotty at best, writes Michael Roberts.

LEAN HOGS on the CME closed mixed on Monday. OCT’11LH futures closed at $86.400/cwt; down $0.700/cwt and $2.600 lower than a week ago. The DEC’11LH contract closed at $83.675/cwt; off $0.900/cwt and $1.475/cwt lower than this time last week. MAY’12LH futures closed at $94.800/cwt; off $0.100/cwt but $0.500/cwt over last report. Deferreds beyond May 2012 were gainers. Hog futures weakened on weak packer demand before Labor Day processor schedules slow down. Retailers have most of their needs now in stock. The bullish discount between October futures and cash hogs narrowed due to lower cash prices. Late Monday USDA put the pork cutout at $100.63/cwt, down $1.16/cwt; and $6.06/cwt lower than last week. According to HedgersEdge.com, the average packer margin was lowered $1.75/hd from last week to a positive $5.85/head based on the average buy of $71.22/cwt vs. the average breakeven of $73.45/cwt. The latest CME lean hog index was placed at $99.75; down $0.993 and $5.34 lower than last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up on small gains Monday. SEPT’11 futures closed at $7.562/bu; up 3.75¢/bu and 35.75¢/bu higher than last Monday. The DEC’11 contract closed at $7.00/bu; up 3.0¢/bu and 35.75¢/bu over last report. Corn futures were supported by estimates for lower-than-expected yield expectations, gains in equities, and a weak dollar. Pro Farmer on Friday put its estimate for 2011 US corn production at 12.484 mi bu; well below USDA’s last forecast for 12.914 bi bu. USDA will release an updated forecast on September 12. Profit taking on overbought technical signals was a limiting factor. Exports were bearish as USDA on Monday put corn-inspected-for-export at 27.314 mi bu vs. expectations for 30-34 mi bu. Cash corn was steady-to-firm as farmers sold more corn at these higher prices. The national average cash price for corn was $7.49/bu with the national average basis placed at 19.0¢/bu; down 1.0¢/bu from the previous day. Futures prices are expected to continue to rally on expectations for a poor US corn yield.

SOYBEAN futures on the Chicago Board of Trade (CBOT) rallied on Monday in active trading with volume 17 per cent higher than the previous 30-day average. The SEP’11 contract closed at $14.380 /bu; up 23.25¢/bu and 61.75¢/bu over last report. NOV’11 soybean futures closed 23.5¢/bu higher at $14.470/bu and 88.75¢/bu higher than a week ago. The MAR’12 contract closed at $14.570/bu; up 24.5¢/bu and 59.5¢/bu higher than this time last week. Fears that dry weather in the US Midwest will push this year’s harvest lower than expected, higher equities, and a lower US dollar were supportive. Soybeans were further supported by talk that China’s soybean crop was also suffering under adverse conditions. Exports were steady with USDA putting soybeans-inspected-for-export at 8.244 mi bu vs. expectations for 7-11 mi bu. Fund money is rolling into speculative soybeans. Funds doubled the size of net bull positions in CBOT soybeans for the week ended August 23 to 94,835 lots; up 49,954 contracts from the previous week. This is the largest weekly increase in 13 months. Pro Farmer’s recent tour estimated the US soybean crop higher than USDA estimates so far. On Friday Pro Farmer pegged the US soybean crop at 3.083 bi bu based on yield estimates of 41.8 bu/ac. USDA’s latest forecast was 3.056 bi bu based on yield estimates of 41.4 bu/ac. The national average cash soybean price was placed at $13.70/bu with a national average basis of 29.0¢/bu; down 2.0¢/bu from Friday. The market is waiting for China to get into the market without results. China is buying less expensive South American soybeans.

WHEAT futures in Chicago (CBOT) finished mixed on Monday with nearbys September and December lower and deferreds higher. Volume was 32 per cent below the 250-day average at 70,000 contracts. SEPT’11 futures finished 5.0¢/bu lower at $7.572/bu but 21.75¢/bu over last week at this time. The DEC’11 contract closed at $7.950/bu; down 2.0¢/bu but 29.0¢/bu higher than this time last week. JULY’12 wheat futures finished at $8.422/bu; up 6.5¢/bu and 32.75¢/bu higher than last report. Exports were supportive with USDA putting wheat inspected-for-export at 23.411 mi bu vs. estimates for 17-22 mi bu. A weakening US dollar encouraging exports and higher equities were supportive. Some profit taking limited gains with large speculators (mostly funds) cutting net bear positions in CBOT wheat to 40,513 lots; the lowest in a month. Cash wheat was steady-to-firm with the national average basis for SRW wheat at -28.0¢/bu; HRW wheat at -54.0¢/bu; and HRS wheat at -36.0¢/bu. Light demand and slow farmer selling are holding nearby basis levels steady in domestic and export markets. Markets are soft for Soft Red and Hard Red Winter wheat while farmers are holding onto Hard Red Spring wheat in anticipation of rising prices, even though the carry is weak.