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Weekly Roberts Market Report

by 5m Editor
6 March 2012, at 4:50am

US - Good crop weather boosting prospects for spring seedings contributed to mixed corn futures, writes Michael T. Roberts.

LEAN HOGS on the CME finished down on Monday. The APR’12LH contract closed at $88.650/cwt; down $1.075/cwt. MAY’12LH futures closed at $97.70/cwt; down $1.025/cwt. AUG’12LH futures finished $0.800/cwt lower at $98.050/cwt. Lean hog futures took losses on Monday due to a mix of technical moves and caution over future pork demand. Late Monday USDA put the lean hog cutout at $85.64/cwt; off $0.20/cwt. The pork carcass value has fallen over 1.5% since this time last week reflecting the choppy demand hanging over the market. Usual seasonal upticks have not been present as packers navigate volatile prices and weak consumer demand. Export markets can be said to be supporting the hog markets for the last year. Technical selling put pressure on hog prices as well. Tight-to-negative packer margins and uncertainty about near-term demand can be expected to keep the pressure on prices. According to HedgersEdge.com, the average packer margin a negative $5.90/head based on the average buy of $63.74/cwt vs. the breakeven of $61.159/cwt. The CME lean hog index was placed at $88.14; up 1.80.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday. MAR’12 futures closed at $6.444/bu; up 3.75¢/bu. The JULY’12 contract closed at $6.506/bu; up 4.5¢/bu. The DEC’12 contract closed at $5.570/bu; down 1.0¢/bu. Support was provided by spillover from soaring soybeans. Good crop weather boosting prospects for spring seedings contributed to mixed corn futures. Without support from soybeans some corn prices would most likely have finished in the red range. Exports were disappointing. US corn is somewhat expensive for global importers. USDA put corn-inspected-for-export at 27.037 mi bu vs. estimates for 31-37 mi bu. Corn volume topped 425,000 contracts. Funds bought an estimated net 9,000 lots. Corn producers should consider pricing up to 10% of the 2012 crop. Users should hold off pricing at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) soared on Monday. The MAR’12 contract closed at $12.936/bu; up 14.75¢/bu. NOV’12 futures closed at $12.812/bu; up 10.5¢/bu. Soybean futures ended higher for the sixth straight session, reaching a five-month high on expectations of continued US export demand from China amid shrinking soy crops in South America. Outlooks for dwindling US soybean supplies were supportive. Brazil’s 2011/12 soybean crop outlook was reduced again Monday. The market is still trying to digest figures from USDA’s outlook forum on 2/12/12 that projected a decline in 2012/13 US soybean stocks and an increase in US corn stocks. The next USDA World Agriculture Supply Demand Estimates (WASDE) report is due out Friday, March 9. Cash soybeans were reported topping $13/bu in some places for the first time in five months. Some profit taking was noted. Prices for oil, gasoline, and gold were lower drawing fund money out of commodities. Fund buying nearly reached 7,000 lots on Monday. Producers should consider pricing another 10% of the 2013 crop at this time.

WHEAT futures in Chicago (CBOT) closed up on Monday. The MAR’12 contract closed at $6.456/bu; up 4.75¢/bu. JULY’12 wheat futures finished at $6.634/bu; up 10.5¢/bu. Wheat futures closed higher on Monday amid short-covering and profit taking after prices dropped early in the session. Deferred contracts made bigger gains than front-months. Speculators raised net short-positions to a record high as of February 21. On Monday 2/27/12 funds recouped some long positions buying more than 4,000 contracts. Crop friendly snowfall moisture watered the crop over the weekend while more snow is expected this week. Exports were bearish with USDA putting wheat-inspected-for-export at 9.375 mi bu vs. estimates for 18-22 mi bu. Some pressure is expected from Europe with the European Union increasing the 2012/13 wheat production forecast 2.5%. This has the potential to continue to put more pressure on global prices. Producers should consider pricing up to 25% of the 2012/ crop.

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