16 May 2007

6 minute read

North America

LIVE CATTLE on the Chicago Mercantile Exchange (CME) finished mixed on Monday. The JUNE’07LC contract closed at $93.200/cwt, off $0.200/cwt but $1.250/cwt higher than last week at this time. The AUG’07LC contract closed at $92.975/cwt, up $0.025/cwt and $2.275/cwt higher than last Monday’s close. Trading was light as the main focus was rolling June contracts into August while funds sold August. The market reacted upward on $1/cwt higher cash cattle prices last week. USDA on Monday put the choice beef cutout at $163.93/cwt, up $1.37/cwt. The market traded sideways today amid worries that beef prices will still turn lower in the coming weeks once stores buy what they need for the Memorial Day holiday. Packer margins also improved. According to HedgersEdge.com, the average beef plant margin for Monday was placed at $30.35/head, up $5.30/head from last Friday and $11.70/head better than last Monday. Expectations for increased exports to South Korea were helpful even though they are moving along slower-than-expected. Cash sellers are strongly encouraged to get cattle sold again this week. It might also be wise to price more short-term corn needs.

FEEDER CATTLE contracts in all but the May’07FC contract finished up on Monday at the CME. The MAY’07 contract closed at 109.550/cwt, off $0.150/cwt in profit taking but $2.050/cwt higher than last Monday. The AUG’07 contract was the most active closing at $113.225/cwt, up $0.375/cwt and $3.475/cwt higher than a week ago. Feeder cattle gained back early losses by the end of the day. Feeders are moving to pastures increasing interest in feeder prices. September ‘07 through January ’08 futures posted fresh highs. Indications are that these contracts have come through a key price reversal. Feeder futures found support in lower CBOT corn and local selling in short covering. Cash feeders also provided market optimism. The CME Feeder Cattle Index for May 10 was up $0.08/cwt to $106.98/cwt. Cash sellers should continue to be patient in selling feeders if you have the pasture. It still looks like it will pay off with a premium for heavier feeders in the coming weeks. It might prove wise to price more short-term corn needs.

LEAN HOGS on the CME closed lower on Monday. MAY’07LH futures closed at $73.475/cwt, off $0.075/cwt and $1.900/cwt lower than last Monday’s close. The JUNE’07LH contract was placed at $74.50/cwt, off $0.475/cwt. JULY’07LH futures closed at $73.600, off $0.850/cwt. The May live hog contract expired at noon, CDT today. Commercial selling was noted in both the June and July contracts. Cash hogs were steady to firm on Monday even as traders expected prices to move lower. Demand for pork is expected to remain strong however in light of the U.S. Memorial Day holiday. USDA put the pork carcass cutout at $77.80/cwt, up $0.99/cwt, the highest it’s been since July 5, 2006. The CME Lean Hog Index was off $0.41/cwt at $74.14/cwt. The average pork plant margin for Monday was a positive $6.85/head, up $1.55/head from Friday and up $10.40/head from last week at this time, according to HedgersEdge.com. Cash sellers should continue to keep hog sales current, pushing them off feed as soon as they are ready. Hog feeders should think about pricing more short-term grain inputs at this time.

CORN on the Chicago Board of Trade (CBOT) closed lower again on Monday. The MAY’07 contract finished at $3.580/bu, off 3.0¢/bu and 11.4¢/bu lower than last Monday’s close. The DEC’07 contract finished at $3.710/bu, off 3.4¢/bu from last Friday and 11.3¢/bu lower than last week at this time. DEC’08 futures finished at $3.900/bu, off 0.4¢/bu from both last Friday and last Monday’s closing tick. Although wet weather was reported in Nebraska, farmers were able to actively get corn plantings moving. This and profit taking proved heavy on the market. Traders worked today thinking USDA would place corn plantings around 70% complete. The report issued at 4:00 p.m. EST showed that 83% of the U.S. corn crop has been planted. Early on Monday USDA issued a statement showing 120,000 tonnes (4.72 million bu) of 06/07 U.S. corn is on its way to Egypt. USDA put corn-inspected-for-export data at 37.581 million bu. This was within expectations. Funds sold over 2,000 contracts with ADM spreading 1,000 July/September lots. May deliveries came in at 448 lots with Goldman stopping at 182 lots. Midwest cash corn was steady on Monday with corn in the Mid-Atlantic States 6.0¢/bu lower in many places. CFTC Commitment of Traders report data show as of May 8 large speculators cutting net long positions to 179,000 lots, off 12,600 contracts. Cash sellers should have considered pricing up to 40%-50% of next year’s production on previous advice. Buying a put option may not be a bad consideration if you want to price more than 50% of the ’07 crop.

SOYBEAN futures on the Chicago Board of Trade (CBOT) found support from falling corn on Monday with the MAY’07 contract closing at $7.622/bu, up 12.2¢/bu and 33.2¢/bu higher than last Monday. NOV’07 futures closed up 8.6¢/bu at $7.994/bu from last Friday and 27.2¢/bu higher than last week at this time. Soybeans were supported by a strong rally in soyoil and very good progress in corn plantings. As of Monday at 4:00 p.m. EST, soybeans were 31% planted according to USDA. Crush data showed that more beans than expected were crushed in April. 138.72 million bu were crushed amid expectations for 135-137 million. Weekly export inspection data put out by USDA showed 7.680 million bu inspected for export. This was below the expected 9-13 million bu. Cash bids on Monday in the Midwest showed strength with beans up as much as 11.0¢/bu in many places. Cash beans in the Mid-Atlantic States were up 9.0¢/bu – 10.0¢/bu amid slow farmer marketings. There were 260 lots delivered on the May contract. The CFTC Commitment of Traders report for May 8 issued last Friday showed managed funds cutting long positions in CBOT beans to 45,300 contracts, down 4,300 lots. If you have not priced up to 60% of the 2007 crop by now you might want to think about doing so. A Call option may be worth a consideration in case there is more upside potential in this market.

WHEAT futures in Chicago (CBOT) closed higher on Monday. The MAY’07 contract closed at $4.890/bu, up 6.0¢/bu and 7.0¢/bu higher than last week at this time. JULY’07 wheat futures finished up 3.4¢/bu at $4.964/bu. This was only 0.24¢/bu higher than last Monday’s close. Wheat rode soybeans coattails to higher prices and found additional support amid worries that global supplies are smaller than expected. Exports were supportive. USDA placed wheat inspected for export at 22.822 bu, over expectations of between 15-20 million bu. May deliveries were not a factor in that only 53 lots were delivered. Rain and cooler weather is expected to return to the U.S. wheat belt to help the U.S. crop condition. USDA placed the U.S. crop at 36% good to excellent, down 21% from the previous week’s rating of 57%. Friday’s CFTC Commitment of Traders report showed as of May 8, large speculators expanded net short positions in CBOT wheat by about 1,600 lots to 8,300 contracts. Producers who have priced between 60%-80% of the ‘07 crop are still in good shape.

TheCattleSite News Desk