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Weekly Roberts Market Report

by 5m Editor
12 April 2012, at 6:34am

US - Profit taking and a stronger US dollar weighed on soybean prices, writes Michael T. Roberts.

LEAN HOGS on the CME finished up on Monday with the exception of the two nearby contracts. The APR’12LH contract closed at $84.425/cwt; down $0.075/cwt and $0.300/cwt lower than last Monday. MAY’12LH futures closed at $94.000/cwt; off $0.225/cwt but $0.50/cwt higher than this time last week. AUG’12LH futures finished $0.350/cwt higher at $94.200/cwt and $1.200/cwt over last report. Lean hogs traded in choppy waters as early strength succumbed to long selling amid weakness in outside markets. Early strength gave into long exits tied to weakness in outside markets and overriding concerns about the strength of pork demand. Even though outside markets pressured hog prices late in the session short-covering pulled futures out on the positive side. Speculators with oil cash continue to watch for signs of consumer behavior change from beef to pork. That is the bet right now. USDA put the pork carcass cutout at $78.54/cwt, up $0.39/cwt but $1.41/cwt lower than a week ago. Cash hogs were $1/cwt higher with tops around $55-$58/cwt on a live basis. Negative packer margins remain a concern for traders. Processing for Monday, April 9 was placed at 274,000 vs. 416,000 last week and 402,000 a year ago. According to HedgersEdge.com, the average packer margin was lowered $9.85/hd to a negative $15.00/head based on the average buy of $61.66/cwt vs. the breakeven of $56.24/cwt. The latest CME lean hog index was estimated at 82.62; down 0.05; and 0.66 lower than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JULY’12 contract closed at $6.412/bu; off 11.0¢/bu and 9.75¢/bu lower than last Monday’s close. The DEC’12 contract closed at $5.502/bu; even with last Friday’s close but 5.25¢/bu higher than last report. Traders were squaring positions and taking profits ahead of the World Agriculture Supply Demand Estimate (WASDE) report due out tomorrow morning at 8:30 am. The March planting report showed farmers planting the largest US corn crop since 1937. Traders expect the report to show tight old-crop supplies, however, USDA report surprises in the past have made traders gun-shy on taking big chances ahead of the report. Exports were not supportive. USDA put corn-inspected-for-export at 23.364 mi bu vs. estimates for 28-34 mi bu. However, 17.2 mi bu were needed to stay on track with USDA’s 1.7 bi bu demand projection. Ukraine announced China bought corn and wheat from them. This is significant in that it is the first time China has imported corn from the Eastern European nation. US cash corn basis levels remain firm amid slow supply movements as farmers plant spring corn. Grain buyers say heavy selling in recent weeks ahead of planting has provided adequate inventories. Corn growers should again seriously consider selling all old crop supplies at these prices; pricing up to 50-60 per cent of the 2012 crop; and 10 per cent of the 2013 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with deferreds up and nearbys decreasing. The MAY’12 contract closed at $14.310/bu; down 3.0¢/bu but 10.0¢/bu over last report. NOV’12 futures closed at $13.200/bu; up 0.5¢/bu but 65.25¢/bu lower than a week ago. Traders evened positions ahead of tomorrow’s WASDE report pressuring nearby prices. Profit taking and a stronger US dollar weighed on prices but solid commercial buying tied to strong demand offset that pressure. Exports were strong with USDA putting soybeans-inspected-for-export at 26.396 mi bu vs. estimates for 23-28 mi bu. This was nearly double the amount needed to stay on pace with USDA’s 1.275 bi bu demand projection. Look for follow-through buying interest emerging in the near-term. Traders in the pits indicate they believe the soybean market is particularly vulnerable to a downward price correction. Producers should consider selling all old crop soybeans at this time while getting to 40 per cent sold in the 2012 crop and 20 per cent sold in the 2013.

WHEAT futures in Chicago (CBOT) closed up on Monday with the exception of the May 2013 contract. The MAy’12 contract closed at $6.430/bu; up 4.5¢/bu but 14.0¢/bu lower than this time last Monday. JULY’12 wheat futures finished at $6.490/bu; up 2.75¢/bu but 20.5¢/bu lower than a week ago. Concerns of the state of the US economy, mainly from the poor jobs report issued Friday didn’t slow down bullish trading today. Some short-covering ahead of the WASDE report was supportive. Wheat prices are not expected to lead a rally though as domestic and global supplies are still ample, even if USDA lowers US wheat ending stocks. Commercial buying was noted. Exports were steady-to-bullish with USDA putting wheat-inspected-for-export at 17.605 mi bu vs. estimates for 13-20 m bu. However, exports fell further behind the pace needed to meet USDA’s demand projections of 1.0 bi bu. More than 34 mi bu in exports was needed this week to meet that pace.

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