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Weekly Roberts Report

29 October 2008

Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up Monday except. OCT’08LC futures were up $1.075/cwt at $88.925/cwt but $0.900/cwt lower than a week ago. The October contract will expire on October 31. The DEC’08LC contract closed at $88.775/cwt up $1.225/cwt but $3.300/cwt lower than last Monday. A good showing on Wall Street today and chartbased trading were supportive. February/December and April/December spreading was a feature in the market. USDA put the Choice Boxed Beef price at $141.52/cwt; off $1.39/cwt from a week ago. The USDA 5-area average cash price for October 24 was placed at $89.79/cwt, up $0.51/cwt. According to HedgersEdge.com, the average packer margin was lowered $24.40/head to a negative $38.40/head based on the average buy of $89.55/cwt vs. the average breakeven of $86.60/cwt. It might be a very good idea to buy up another 20%-30% of the 2009 feed needs on the down corn-days this week.

FEEDER CATTLE at the CME were up on Monday except for the October contract. OCT’08FC futures closed at $95.900/cwt, off $0.250/cwt but $2.750/cwt lower than a week ago. Long liquidation ahead of deliveries pressured the October contract. The NOV’08FC contract finished at $95.550/cwt, up $1.725/cwt but $3.050/cwt lower than this time last week. Feeders were supported by spillover from live cattle and a better Wall Street day. Cash feeders in Oklahoma City gained $1-$3/cwt amid an increased demand for calves as wheat pastures were looking better. The CME Feeder Cattle Index was placed at $97.43…97.61/cwt; off $0.42/cwt from Friday but up $0.18/cwt from a week ago. If you have the pasture, hold feeders to a little heavier weight.

LEAN HOGS on the CME closed up on Monday. DEC’08 futures closed up $0.050/cwt at $58.55/cwt and $2.300/cwt higher than a week ago. The APR’09LH contract closed at $70.450/cwt; up $1.00/cwt. Short covering supported nearbys while fund buying helped deferreds. As with all the markets, a better feeling on Wall Street was supportive. The discount to the CME lean hog index supported prices late in the day. Expectations for flat-to-lower cash prices later in the week suppressed prices at the open. The latest CME Lean Hog Index was placed at $61.01/cwt, off $3.58/cwt from a week ago. The USDA pork carcass cutout was placed at $65.97/cwt; off $0.42/cwt from Friday but up $0.95/cwt from this time last Monday. Cash hogs started lower Monday and are expected to remain steady to somewhat weaker this week. According to HedgersEdge.com, the average pork plant margin was placed at a positive $12.25/head, a $7.00/head increase over this time last week. This was based on the average buy of $42.32/cwt vs. the average breakeven of $46.94/cwt. It might be a very good idea to price up to 20% of future feed needs at this time. Sell hogs at heavier weights.

CORN futures on the Chicago Board of Trade (CBOT) were up again this Monday on a technical bounce and end-user buying. The DEC’08 contract closed at $3.852/bu; up 12. 5 ¢ /bu from Friday but 33.25 ¢ /bu lower than a week ago. MAR’09 corn futures closed at $4.362.022/bu; up 13.25 ¢ /bu but 34.25 ¢ /bu lower than this time last Monday. Good prices in the wheat and soy markets were supportive. USDA put corninspected- for-export at 21.241 mi bu vs. expectations for between 30-36 mi bu. Severe weather over the weekend was bullish for corn prices. A couple of floor sources said that the market traded USDA expectations of a 35-40% harvest number. Cash corn bids were weaker in the U.S. Midwest and Mid- Atlantic States as bins and barges were full. For the first time in 2 ½ years the CFTC Commitment of Traders report supplement showed large speculators moving from net bull to net bear positions. Index funds continued to buy putting over 4,000 contracts on the bull-books. Many analysts are talking about a corn-market bottom. I’d say wait and see until the financial mess straightens out. Those who have up to 70% of the ’08 crop priced today are in good shape.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed up on Monday. NOV’08 soybean futures closed at $8.930/bu; up 29.25 ¢ /bu but 36.0 ¢ /bu lower than a week ago. The JAN’09 soybean contract closed at $9.406…8.974/bu; up 30.5 ¢ /bu but 43.25 ¢ /bu lower than last Monday. Chart based buying interest, bad weather over last weekend in soybean country, and a one-day recovery on Wall Street were supportive. News reports from Brazil that farmers there would not increase soybean plantings because of credit problems and drought was also supportive in Chicago. The market traded expectations of an 80% harvest completion. USDA put soybean-inspected-for-export at 41.326 mi bu vs. expectations for between 30-40 mi bu. Cash soybeans were weak across the country on recently filled bins due to enduser buying. The CFTC Commitment of Traders report had large speculators switching from net bull to net bear positions while funds bought around 4,000 lots. It is good if you have priced 60%-70% of the ’08 crop. Wait to price more.

WHEAT futures in Chicago (CBOT) closed up on Monday. The DEC’08 contract closed at $5.294/bu, up 13.5 ¢ /bu from last Friday but 34.0 ¢ /bu lower than a week ago. JULY’09 wheat futures were up 14.5 ¢ /bu at $5.752/bu but 34.5 ¢ /bu lower than this time last week. Oversold conditions and other technical signals were supportive. Higher corn and soybean prices were supportive. USDA put wheatinspected- for-export at 21.891 mi bu vs. expectations 18-21 mi bu on fresh demand from Syria and Iraq. News that Australia was cutting its wheat crop forecast also provided news for buyers. The CFTC Commitment of Traders report had large speculators increasing net bear positions in CBOT wheat by over 1,000 lots while funds bought right at 2,000 lots. Hopefully 10%-20% of the ’09 wheat crop has been priced.

2008 December , Corn, October 27, 2008

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