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Weekly Roberts Report

08 April 2009

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) finished mixed Monday with nearbys up and deferreds outside October ’09 futures down. The AUG’09LC contract was up $0.275/cwt at $85.075/cwt; $0.675/cwt over week before last. DEC’09LC futures closed at $90.150/cwt; off $0.05/cwt. The market couldn’t make up its mind early but found support against spec selling and profit taking after higher cash cattle were reported late in the day. Cash cattle were up $1-$2/cwt from last week in the southern Plains while USDA placed the 5-area price at $84.76/cwt; $1.77/cwt higher than week before last. USDA put the Choice Boxed beef price at $136.75/cwt; up $1.17/cwt. Packers are hoping that the spring grilling season will pick up beef demand while a depressed stock market hangs like a cloud over any good news. According to HedgersEdge.com average packer margins declined $8.85/head from week-before-last. The average processor margin was placed at a negative $51.40/head based on the average buy of $82.99/cwt vs. the average breakeven of $79.02/cwt. Feed buyers should hold off buying needs on expected downticks in corn. If you have to buy now corn prices are expected to get softer in a couple of weeks.

FEEDER CATTLE at the CME closed up on Monday. The APR’09FC contract closed at $95.95 /cwt; up $0.550cwt and $1.950/cwt over week-before-last. AUG’09FC futures finished at $99.600/cwt; up $0.850/cwt and $0.425/cwt higher than last report. Higher nearby live cattle, buy stops, spreading into back months, and heavier buy-over-sell orders were supportive. Cash feeders were not as supportive; selling steady-to-$2/cwt lower in Oklahoma City. Prices are expected to be better this week on improving grass. The CME Feeder Cattle Index for April 2 was placed at $94.99/cwt, up $0.72/cwt. If you need corn buy on down ticks in the corn market. If you have grass you’re in good shape. Move cattle when ready on market uncertainty.

CORN futures on the Chicago Board of Trade (CBOT) closed up mildly on Monday. MAY’09 corn futures closed at $4.054/bu; up 1.0¢/bu and 10.0¢/bu higher than two weeks ago. The JULY’09 contract closed at $4.156/bu; also up 1.0¢/bu and 9.75¢/bu higher than Monday before last. DEC’09 corn futures finished at $4.366/bu; up 1.25¢/bu and 9.5¢/bu over week before last. Exports and short-covering near the close were supportive but weakness in the stock market and soft crude oil prices limited gains. Some pit sources said that the market found profits in the cold, wet spring weather but they did not expect that to last and that the rally was not worth putting much time into. USDA placed corn-inspected-for-export at 42.3 mi bu vs. estimates between 32.0-35.0 mi bu. Cash corn bids in the U.S. Midwest were mixed as farmers sold some old crop corn. Opening bids in the U.S. Mid-Atlantic States on Monday ranged 1.0¢/bu-3.0¢/bu cents lower. Ethanol margins were weaker on this short increase in corn prices. Funds were net buyers of 1,000 contracts increasing net long positions. If you haven’t sold all old crop corn now you would do well to consider doing so. It is a very good idea to get the ’09 crop priced to 45%. Feed purchasers should see lower corn prices in a week or two.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were off on Monday. MAY’09 soybean futures closed at $9.994/bu; down 1.5¢/bu but 44.0¢/bu over this time two weeks ago. The JULY’09 contract finished off 1.5¢/bu at $9.934/bu but 41.5¢/bu over Monday before last. The NOV’09 contract closed at $9.120/bu; down 11.25¢/bu but 52.75¢/bu higher than last report. Bullish fundamentals of shrinking global supplies and reports of lower-than-expected soybean yields in South America were supportive. However, profit-taking on last Friday’s markets, declining U.S. stock markets, and crude oil prices hung like a rock around the neck of soybean futures. The ’09 November contract was particularly hobbled by new-crop corn/soybean spreads. USDA placed soybeans-inspected-for-export at 16.3 mi bu vs. expectations for between 19.0-22.0 mi bu. Even though this was smaller than expected this is viewed as neutral as there is word of better exports in the next few days. Large non-commercials bought near 5,000 lots while funds sold 1,000 contracts. If you haven’t done so already it is a really good idea to sell all old crop soybeans in the bin and get up to 35% of the ’09 crop priced now.

WHEAT futures in Chicago (CBOT) closed down on Monday. The MAY’09 contract closed at $5.557/bu; down 6.5¢/bu but 6.5¢/bu (no that’s not a typo) higher than this time last week. JULY’09 wheat futures finished off 6.75¢/bu at $5.690/bu but 7.5¢/bu higher than a week ago. Profit taking, bearish fundamentals, a higher U.S. dollar that hurts exports, and the falling stock market weighed on prices. Harsh weather in the U.S. winter wheat growing areas buoyed prices on thoughts quality will be hurt. Exports were neutral with USDA placing wheat-inspected-for-export at 16.5 mi bu vs. expectations for between 15.0-18.0 mi bu. Funds were net sellers of about 2,000 lots while increasing net-bear positions in CBOT wheat. On Monday, the Chicago Board of Trade began central clearing of over-the-counter swaps for certain commodities in an attempt to make that portion of the market more transparent. It is a very good idea to have 25% of the 2009 crop sold.

LEAN HOGS on the CME closed down on Monday. The APR’09LH contract closed at $59.725/cwt; off $0.550/cwt and $0.925/cwt lower than two weeks ago. The JUNE’09LH contract was off $0.900/cwt at $72.750/cwt but $0.125/cwt higher than week before last. Profit taking on the large premium of futures to the CME Lean Hog Index weighed on prices. Spreading limited the June while supporting the April and July contracts. Pit traders sold the June while buying April and July futures. The latest CME index was placed at $58.04/cwt; down $0.11/cwt. Trade sources said they are expecting lower hog numbers and uptrending cash prices. Long position gains last week led to market optimism. Better demand is expected due to the Easter holiday. Last Friday USDA placed the pork cutout at $56.94/cwt; up $0.81/cwt. According to HedgersEdge.com, the average pork plant margin was down $6.85/head as that margin slid to a negative $4.30/head. This was based on the average buy of $41.84/cwt vs. the average breakeven price of $40.26/cwt. It is a good idea to buy feed on corn price downticks and sell hogs when ready.

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