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Roberts: Weekly Agricultural Market Report

LEAN HOGS on the CME finished down on Monday. DEC’10LH futures finished at $68.450/cwt; off $2.220cwt but $0.425/cwt higher than last week at this time. The FEB’11LH contract closed down $1.550/cwt at $74.375/cwt but $1.500/cwt higher than last report. The APR’11LH contract closed at $78.275/cwt; off $1.675/cwt but $0.900/cwt higher than this time last week. Higher corn prices, more pork, plenty of heavy hogs, profit taking and lower cash pork prices spurred selling. USDA on Friday showed nearly 10% more in storage than a month ago due to a large increase in hams. After opening slightly lower futures fell further on premiums to current cash prices. Technical signals show broken chart support including the 10-day moving average and a trend line across recent lows. Spreading was noted as traders sold December and bought February or April. Cash hogs ranged $0.50-$0.75 lower to a range of $44.50/cwt-$47.00/cwt on weaker demand as most packers were stocked through Friday. USDA put the cash pork cutout at $76.06/cwt; down $0.70/cwt. According to HedgersEdge.com, the average packer margin was lowered $6.10/head to a positive $21.25/hd based on the average buy of $46.65cwt vs. the average breakeven of $54.41/cwt. The CME lean hog index was placed at 66.76/lb; down 0.74/lb and 5.98/lb lower than this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. DEC’10 corn futures closed up 8.75¢/bu at $5.686/bu and 1.14¢/bu higher than last report. The MAR’11 contract closed at $5.814/bu; up 9.25¢/bu and 1.2¢/bu higher than last Monday. The DEC’11 contract closed at $5.326/bu up 14.25¢/bu and 1.6¢/bu over last Monday. Weak yields, risky weather, a weaker U.S. dollar, hedge fund buying, news that China will be buying more U.S. corn, and strong crude oil prices were supportive. When the U.S. dollar is weaker exports are encouraged because U.S. exports are cheaper. Hedge funds are buying to hedge inflation, and higher crude oil affects corn prices because of ethanol demand. Funds bought over 7,000 lots. Exports were not supportive with USDA putting corn-inspected-for-export at 19.813 mi bu vs. expectations for 25-26 mi bu. Weakening demand is seen as limiting market gains. In other news storms set to blow through the Midwest this week could cause crop losses that could be supportive. The U.S corn crop is seen as especially vulnerable due to very dry weather and the crop being very tall and susceptible to being blown over. The U.S. corn harvest is 83% complete; up from 20% this time last year and above the5-year average of 49% for this time of year. Yields have been disappointing and this could lead to tight supplies next spring. Looks like corn prices are fundamentally supported past the near term.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished up on Monday. NOV’10 futures closed at $12.176/bu, up 18.25¢/bu and 33.75¢/bu higher than last report. The MAR’11 contract closed at $12.372/bu; up 18.5¢/bu and 34.0¢/bu over a week ago. NOV’11 soybean futures closed up 11.5¢/bu at $11.650/bu and 12.75+¢/bu higher than last week at this time. A falling dollar, brisk fund buying, and good exports were supportive. Funds bought 6,000 lots amid a good volume of 217,000 contracts vs. the 30-day average of 174,000 trades. USDA put soybeans-exported-for-export at 68.344 mi bu vs. expectations for 31-40 mi bu. Exporters reported heavy sales to China for 2010/2011 delivery. Dry weather in Brazil continues to push China to U.S. soybeans. USDA also put U.S harvest progress at 91% vs. 42% a year ago and the 5-year average of 72%. Strong fundamentals indicate continued price strength.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’10 wheat contract closed at $6.740/bu; up 3.25¢/bu but 16.0¢/bu lower than last Monday. JULY’11 futures finished up 5.25¢/bu at $7.412/bu but 24.75¢/bu lower than a week ago. A weak U.S. dollar pricing U.S. wheat better to importers and news last Friday that Russia would retain its ban on grain exports to July 2011 were supportive. Dry weather in the Ukraine is slowing wheat seedings there. Spillover from corn and soybeans were also supportive. Wheat has depended on strength from other commodities since near-term supply threatens weakness. However, the Russian threat of export release hangs over the market. Fundamentally wheat prices have improved from mildly bearish to neutral.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished down on Monday. The OCT’10LC contract closed at $101.400/cwt; off $0.800/cwt but $2.325/cwt higher than last Monday. The DEC’10LC contract closed down $1.050/cwt at $100.650/cwt and $0.075/cwt under last report. The APR’11LC contract closed at $106.000/cwt, down $0.625/cwt but $1.000/cwt over last week at this time. Prices were pressured by profit taking, high prices not seen in 7 years, and USDA’s cattle-on-feed report showing a 3% increase in feedlot supplies over last year. Cash prices were mixed on Monday with choice higher and select lower. USDA put the 5-area cash price at $100.98/cwt; $4.33/cwt over last report amid trade volume of 32,620 head in the Texas Panhandle region, 50,294 head in Kansas, and 65,329 head in Nebraska. USDA on Monday put choice boxed beef at $162.20/cwt; up $0.78/cwt and $6.30/cwt higher than this time last week. According to HedgersEdge.com, the average packer margin was raised $0.75/hd to a negative $9.50/hd based on the average buy of $99.56/cwt vs. the average breakeven of $100.26/cwt. Cattle should be near a topping action as corn prices rise, technical signs show strong tendency for profit taking, and seasonal pressure on prices are upon the market.

FEEDER CATTLE at the CME finished lower on Monday. The OCT’10FC contract finished down $0.100/cwt at $111.100/cwt but $2.300 /cwt higher than last week at this time. The NOV’10FC contract finished at $111.875/cwt, off $0.675/cwt but $2.325/cwt higher than last report. APR’11FC futures finished at $113.925/cwt; down $0.475/cwt but $2.125/cwt higher than week before last. Feeders were pressured by lower fat cattle and higher corn prices. Compared to last week cash feeders and heifers were steady to $1/cwt higher. Demand was considered moderate-to-good. In Oklahoma City at the National stockyards receipts were estimated at 7,700 vs. 8,016 last Monday and 9,756 head a year ago. The latest CME feeder cattle index was placed at 110.38/lb; up 0.31/lb and 2.13/lb over last report.

By Mike Roberts
Virginia Cooperative Extension


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