17 December 2008

4 minute read

North America

Thank you to all the faithful readers and everyone that submits questions, concerns, and comments. Due to the holidays the Roberts Agricultural Commodity report will not be posted for the weeks of December 22 and December 29. The report will resume posting on January 5, 2009. I hope that your holidays are all that you hope they could be.
- Mike Roberts

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up on Monday. The DEC’08LC contract closed at $84.150/cwt; up $0.825/cwt and $1.05/cwt higher than a week ago. FEB’09LC futures closed up $1.000/cwt at $83.800/cwt and $1.125/cwt higher than last Monday. Strength was noted on short-covering and increased boxed beef values. A weaker U.S. dollar, beginner exports to South Korea, and higher Box Beef values were supportive.

USDA placed choice beef at $144.07/cwt, up $2.85/cwt. Cash cattle on Monday were weaker as USDA put the 5-area price at $83.96/cwt; $2.28/cwt lower than last Monday. Gains were checked by a lower U.S. stock market. Early estimates for Cattle on Feed are expected to be light as federally-inspected cattle slaughter declined last week by 2.3% compared to slaughter rates 6.7% lower than this time last year. According to HedgersEdge.com, the average packer margin was raised $14.95/head from last week to a negative $64.00/head based on the average buy of $85.15/cwt vs. the average breakeven of $80.27/cwt.

FEEDER CATTLE at the CME followed live cattle up on Monday. JAN’09FC futures finished at $88.125/cwt, up $0.95/cwt and $0.225/cwt higher than last Monday. The MAR’09FC contract settled at $87.925/cwt; up $1.000/cwt and $2.925/cwt higher than this time last week. Cash feeders in Oklahoma City were off as much as $3.00/cwt. The CME Feeder Cattle Index for December 11 was placed at $88.57/cwt, down $0.01/cwt.

CORN futures on the Chicago Board of Trade (CBOT) closed up on Monday. The DEC’08 contract has expired. MAR’09 corn futures closed at $3.752/bu; up 1.75 ¢ /bu and 45.25 ¢ /bu (13.7%) higher than last Monday. A weaker U.S. dollar and bull spreading in corn/soybeans were supportive. One report stated that some analysts are expecting corn acreage to fall by as much as 3.6 mi acres in 2009. We’ll see. If input costs are high and corn prices stay relatively non-profitable at these levels it just may happen. Producers try to go where the money is … just like anyone else. Other support for corn came from exports. USDA reported on Monday that 29.3 mi bu had been inspected for export vs. estimates for between 22.0-26.0 mi bu. China released news that it would be “perfecting” reserves of oil, coal, and grain. What does that mean for the U.S. corn market? I guess we’ll see. Weather in South America was favorable for crops there and is expected to remain so for the next 10 days. Farmers are waiting on prices to rise further as they hold onto stocks. Cash corn prices in the U.S. Mid-Atlantic states were 22.0 ¢ /bu – 29.0 ¢ /bu higher on Monday. Large speculators decreased net bear positions in CBOT corn as funds bought over 4,000 lots. It should still pay to store. A put option is still not out of the question.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The JAN’09 soybean contract closed at $8.460/bu; off 8.0 ¢ /bu but 25.75 ¢ /bu higher than this time last week. MAR’09 soybean futures closed at $8.494/bu; down 6.75 ¢ /bu but 24.0 ¢ /bu higher than last Monday. Lower-thanexpected exports, slipping crude oil prices and bear corn/soybean spreads weighed on the market. Analysts estimates that 2009 soybean acres would increase 5.56 mi ac to 81.455 mi acres weighed on prices. USDA placed soybeans-inspected-for-export at 34.4 mi bu vs. expectations for between 35.0 – 40 mi bu. Good soybean growing weather in Argentina didn’t help either. Cash soybeans in the U.S. Midwest were steady amid slow producer selling. Cash prices in the U.S. Mid-Atlantic States were weaker 3.0 ¢ /bu – 5.0 ¢ /bu as end-user needs were met last week. Large speculator bull positions were relatively unchanged with funds selling just fewer than 1,000 contracts. Consider holding beans not sold last week on up-ticks. A put option is still not out of the question.

WHEAT futures in Chicago (CBOT) were up on Monday. The DEC’08 contract expired. The MAR’-09 contract closed at $5.200/bu, up 7.0 ¢ /bu. JULY’09 wheat futures were up 6.75 ¢ /bu at $5.454/bu and 28.75 ¢ /bu higher than last week. Chart-based buying in short-covering was the theme. A weaker U.S. dollar helped U.S. wheat creating pricing opportunities for importers from other countries. Winter weather was of some concern in the U.S. Plains. Lower crude oil prices pressured gains late in the day. A leading analyst expects U.S. wheat acres to be reduced by as much as 2.1 mi acres. Exports were brisk with Iraq tendering for 50,000 tonnes (1.84 mi bu) while Taiwan tendered for 65,020 tonnes (2.1 mi bu) of U.S. wheat. Wet weather in Australia was not good for any wheat left behind to dry out. Large speculators increased net bear positions while funds bought 2,000 lots. Hold off on pricing any more wheat until later.