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Weekly Roberts Report

02 September 2010

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) closed down on Monday with the exception of the April 2011 contract. AUG’10LC futures closed at $97.250/cwt; off $0.800/cwt and $2.475/cwt lower than last report. The OCT’10LC contract closed at $97.25/cwt; down $0.050/cwt. The DEC’10LC contract closed off $0.100/cwt at $100.650/cwt; $0.500/cwt lower than this time last week. The APR’11LC contract closed at $102.875cwt, up $0.05/cwt and $0.825/cwt higher than last report. Fund rolling of long October futures into December, February, and April futures and expectations that cash markets may be topping pressured futures. USDA put choice boxed beef $163.86/cwt; off $0.14/cwt but $0.72/cwt over last week at this time. USDA put the 5-area average at $99.05/cwt; $0.30/cwt over last report. According to HedgersEdge.com, the average packer margin was lowered $3.00/hd from last week to a positive $20.00/hd based on the average buy of $99.14/cwt vs. the average breakeven of $100.70/cwt.

FEEDER CATTLE at the CME finished down Monday. The August contract expired at noon up $0.175/cwt at $114.925/cwt. SEP’10FC futures closed at $115.100/cwt; down $1.175cwt. The OCT’10FC contract finished off $1.075/cwt at $115.925/cwt and $1.725/cwt lower than last week at this time. The NOV’10FC contract finished at $116.450/cwt, down $0.850/cwt and $1.225/cwt lower than a week ago. Gains in corn futures and weakening cash markets pressured futures. Cash feeders were $1-$3/cwt lower. Estimated receipts in Oklahoma City National Stockyards were put at 11,500 hd vs. 9,878 hd last Monday and 8,766 hd this time a year ago. Demand for steers and heifers was steady-to-weaker with feeder buyers bidding up fleshy animals letting stocker owners put the weight on. They would rather buy the weight than the feed. The CME feeder cattle index 114.69/lb; off 0.02/lb but 0.93/lb higher than last report.

CORN futures on the Chicago Board of Trade (CBOT) closed up Monday on reports that corn yields will likely be lower than USDA estimates of 165 bu/ac. Yield estimates are running 163.79 bu/ac. The SEPT’10 contract closed at $4.254/bu; up 4.5¢/bu and 8.25¢/bu higher than last report. DEC’10 corn futures closed up 5.5¢/bu at $4.414/bu and 8.75¢/bu higher than last Monday. The DEC’11 contract closed at $4.466/bu; up 6.25¢/bu and 0.75¢/bu higher than a week ago. Increased demand and exports were supportive as USDA put corn-inspected-for-export at 45.265 mi bu vs. expectations for 33-36 mi bu. Dry, hot weather in the US Midwest have traders thinking an early harvest may be coming but the weather will also hurt yields if it continues. Large speculators are net bulls as funds bought over 10,000 lots. It would be a good consideration to price 60 per cent of the 2011 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. SEP’10 soybean futures finished down 4.0¢/bu at $10.180/bu but 11.0¢/bu higher than a week ago. NOV’10 futures closed at $10.224/bu, down 3.5¢/bu but 17.0¢/bu higher than last week at this time. NOV’11 soybean futures closed down 2.5¢/bu at $10.120/bu; 15.5¢/bu over last report. Soybeans are weakening on softening basis at gulf ports as harvest gets going. Exports were bearish as USDA put soybeans-inspected-for-export at 7.174 mi bu vs. expectations for 10-15 mi bu. Funds sold over 2,000 lots as large speculators lowered net bull positions. Soybeans were also pressured by spreaders selling soybeans and buying corn. Both soybean and corn have yield challenges. It would be a good idea to hold at 90% sold in the 2010 crop and price up to 30% sold in the 2011 crop.

WHEAT futures in Chicago (CBOT) closed up on Monday. The SEPT’10 wheat contract closed at $6.712/bu; up 8.75¢/bu but 21.0¢/bu under last week at this time. JULY’11 futures finished up 5.25¢/bu at $7.102/bu; 8.25¢/bu cents lower than last report. Drought in Russia, Australia, and Argentina along with too much water and rain in Germany and northern France have combined to support wheat futures. Exports were supportive with USDA putting wheat-inspected-for-export at 25.521 mi bu vs. expectations for 20-25 mi bu. Large speculators are shifting from net-bear to net-bull positions with funds buying 4,000 lots. It would be a good idea to get to 85% sold in the 2011 crop.

LEAN HOGS on the CME closed mixed on Monday. OCT’10LH futures finished at $74.875/cwt; down $0.050/cwt and $3.350/cwt under last report. The FEB’11LH contract closed up $0.025/cwt at $75.100/cwt; $2.975/cwt lower than last Monday. Floor sources said the pits think that cash prices are topping and technical selling is pressuring futures prices. Retail prices turned lower with USDA putting the average cash pork price at $93.51/cwt; off $0.22/cwt and $1.98/cwt lower than last report. Rolling October bull positions into December and February weakened prices. The latest lean hog index was placed at 84.30/lb; up 0.09/lb and 0.52/lb over this time last week. Short covering was the primary trading action because of the large discount to cash prices caused by recent losses in October futures. According to HedgersEdge.com, the average packer margin was raised $0.50/head to a positive $21.50/hd based on the average buy of $59.26cwt vs. the average breakeven of $67.32/cwt.

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