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Weekly Roberts Market Report

by 5m Editor
12 October 2011, at 7:20am

US - Corn, soybean and wheat futures all finished up on Monday, whilst dairy futures finished down, writes Michael T. Roberts.

LEAN HOGS on the CME finished mixed on Monday with nearby’s down and deferreds up. OCT’11LH futures closed at $93.025/cwt; down $1.650/cwt and $0.100/cwt lower than last report.

The DEC’11LH contract closed at $87.750/cwt; off $1.650/cwt but $0.950/cwt over last report. MAY’12LH futures closed at $98.350/cwt; up $0.250/cwt and $1.850/cwt higher than a week ago.

Nearby contracts fell nearly two per cent on falling cash hog prices due to softening demand. Retailers are backing off fresh pork at current prices.

Bearish seasonality is also an influence; however, futures were supported by Chinese demand for US pork after the 2007 disease outbreak decimated herds in that country.

According to HedgersEdge.com, the average packer margin was lowered $9.35/hd from last report to a positive $2.00/head based on the average buy of $69.64/cwt vs. the average breakeven of $70.39/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday in light volume. The DEC’11 contract closed at $6.050/bu; up 5.0 ¢ /bu and 12.75 ¢ /bu over a week ago.

MAR’12 futures closed at $6.174/bu; up 4.75 ¢ /bu and 11.5 ¢ /bu higher than this time last week. The DEC’12 contract closed up 4.25 ¢ /bu at $5.722/bu and 9.75 ¢ /bu higher than a week ago.

Futures were supported by a weak dollar, firm outside markets, and oversold conditions. The US dollar index decreased 1.6 per cent making US corn a better buy for importers. Some upside potential exists on technical chart signals.

The market is waiting on USDA’s release of its World Agriculture Supply Demand Estimate (WASDE) due out at 8:30 am on Wednesday, 10/12/11. Corn prices have firm upside potential.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. Trading volume was up nearly 19 per cent from the most recent 30-day average. USDA’s WASDE report will fuel trading on Wednesday. NOV’11 soybean futures closed 19.25 ¢ /bu higher at $11.774/bu; even with this time last week.

The MAR’12 contract closed at $11.976/bu; up 18.25 ¢ /bu but 0.5 ¢ /bu lower than a week ago. Futures closed in a broad rally on news that France and Germany will be coming up with a plan to contain the monetary crisis developing in Europe.

A lower US dollar was supportive. As of last Friday large funds decreased net bull positions by nearly 17,000 contracts.

WHEAT futures in Chicago (CBOT) finished up on Monday in light volume. The DEC’11 contract closed at $6.114/bu; up 4.0 ¢ /bu but 0.75 ¢ /bu lower than last report.

JULY’12 wheat futures finished at $6.830/bu; up 2.0 ¢ /bu but 9.75 ¢ /bu lower than this time last week. Volume was light, placed at 50,500 contracts. This was well below the 30-day average of 74,720 lots and the three-quarter average of 102,572 contracts.

Wheat futures were supported by a weaker US dollar. Markets closed well below session highs as traders locked in profits. Traders will wait to see what is in the USDA WASDE report due out Wednesday morning.