29 September 2011

4 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday with the exception of the nearby September contract. SEP’11DA futures finished at $19.01/cwt; up $0.01/cwt and up $0.08/cwt over last report.

The JAN’12DA contract closed at $16.80/cwt; off $0.17/cwt and $0.22/cwt lower than a week ago. Milk futures sold off in the final week of the quarter with fourth quarter milk futures falling $0.37/cwt.

Cheese, butter, and Non-Fat Dry Milk (NDM) were also lower. Butter supplies into September were placed at 165.6 mi lbs vs. 220.9 mi lbs this time last year.

However, commercial cheese inventories ended August at the lowest level on the smallest August drawn-down since 1992. Dairy cattle slaughter was higher in August amid increasing cow numbers.

Previous higher milk prices are encouraging cow retention while cooler temperatures are aiding milk production. There is some concern that prices are looking at a one to three per cent decline on increasing cow numbers.

Average prices for Class III milk are: three months out = $18.01/cwt ($0.13/cwt lower than last report); six months out = $17.43/cwt ($0.17/cwt under last Monday); nine months out = $17.12/cwt ($0.33/cwt lower a week ago); and 12 months out = $17.07/cwt ($0.18/cwt under last report).

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) surged higher on Monday with some contracts up the limit. The OCT’11LC contract closed at $119.725/cwt up $2.900/cwt and $2.100/cwt higher than last report.

JUNE’12LC futures closed at $123.750/cwt; up $2.800/cwt and $0.10/cwt over last report. Futures rose on supply tightening as producers begin to show signs they’ve depleted their cattle supplies.

USDA said Friday after the close one per cent less cattle were placed in feedlots compared to a year ago. The declining number of animals being sold to feedlots is expected to translate into higher prices for beef.

Cash cattle were actively traded last week. USDA put the five-area average price at $115.89/cwt.

Late Monday, 29 August, USDA put the beef cutout value at $184.17/cwt; up $0.86/cwt but $1.12/cwt lower than a week ago. According to HedgersEdge.com, the average packer margin was lowered $7.60/head from last report to a negative $16.50/head based on the average buy of $116.27cwt vs. the average breakeven of $115.01/cwt.

FEEDER CATTLE at the CME closed strongly up on Monday with many contracts up the limit. The OCT’11FC contract finished at $137.825/cwt, up $3.000/cwt and $3.

The NOV’11FC contract settled at $138.550 … 139.575/cwt, up $3.000/cwt; and $1.025/cwt higher than last report. APR’12FC futures finished at $144.450/cwt; up $3.000/cwt and $2.800/cwt higher than this time last week.

Feeders were pulled higher by live cattle and lower grain markets. Cash cattle were $2/cwt higher over last week. The Oklahoma National Stockyards estimated receipts at 9,000 head vs. 9,961 head last Monday and 6,598 a year ago.

The latest CME feeder cattle index was placed at $131.63; off $0.07 and $0.65 lower this time last week.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The DEC’11 contract closed at $6.480/bu; up 9.5 ¢ /bu but 44.25 ¢ /bu lower than a week ago.

MAR’12 futures closed at $6.612/bu; up 9.25 ¢ /bu but 43.75 ¢ /bu lower than this time last week. The DEC’12 contract closed up 11.0 ¢ /bu at $5.894/bu but 28.25 ¢ /bu lower than a week ago.

Exports, oversold technicals, and higher cash corn prices were supportive. USDA put corn-inspected-for-export at 34.282 mi bu vs. expectations for 27- 31 mi bu.

Large speculators are leaving corn positions on a sinking economy and indications that farmers will plant more than 94 mi acres of corn next year, the most since World War II.

There may be some support near the end of the week as speculators buy back previously sold positions. Corn producers should probably hold off pricing any more corn at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) were mixed on Monday with deferreds beyond September 2012 down and nearbys up. NOV’11 soybean futures closed 19.5 ¢ /bu lower at $12.596/bu; 1.75 ¢ /bu up but 76.5 ¢ /bu over last report.

The MAR’12 contract closed at $12.780/bu; up 1.5 ¢ /bu but 67.0 ¢ /bu lower than a week ago. Exports were not supported with USDA putting soybeansinspected-for-export at 7.418 mi bu vs estimates of 10-12 mi bu.

Losses were pared after the market fell to 10-month lows on technical selling. Trading was brisk in volume of 180,000 contracts; 12 per cent over the previous 30-day average. It still looks like soybeans may become cheaper sooner rather than later.

WHEAT futures in Chicago (CBOT) finished up on Monday. The DEC’11 contract closed at $6.482/bu; up 7.5 ¢ /bu and 10.75 ¢ /bu higher than last report.

JULY’12 wheat futures finished at $7.042/bu; up 6.25 ¢ /bu but 35.0 ¢ /bu lower this time last week.

Exports were neutral with USDA putting wheatinspected-for-export at 21.605 mi bu vs estimates for 20-25 mi bu.

Short covering, oversold conditions, and dry conditions in the southern US plains were supportive. Wheat prices edged higher on sluggish buying. Pit sources said concerns over economic recession are held prices up. Global supplies show some signs of tightening. End users should consider pricing near-term needs.