27 July 2011

4 minute read

North America

FEEDER CATTLE at the CME closed down on Monday. The AUG’11FC contract finished at $136.050/cwt, down $0.350/cwt but $1.475/cwt higher than last report. The NOV’11FC contract settled at $138.975/cwt, off $0.150/cwt but $1.875/cwt over last report.

Feeders closed lower on a barrage of feeders moving from scorched pastures into feedlots. Reports from Japan of radiation-contaminated beef underpinned prices. Problems in the beef supply in Japan were seen as potentially increasing US exports to that country. Oklahoma National Stockyards in Oklahoma City, OK estimated receipts at 8,600 head vs. 12,661 last Monday and 6,013 a year ago.

Compared to last week, steers under 750 lbs were steady to two dollars/cwt lower with those over 750 lbs steady to two dollars/cwt higher. Heifers were the same story. Steer claves were three to five dollars/cwt higher with heifer calves steady. Demand was considered moderate. Feedlot operators were paying higher prices for heavier feeders because they don’t have to buy as much feed for those over 750 lbs.

The latest CME feeder cattle index was placed at $135.90; down $0.15 and $3.43 lower than a week ago.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. SEPT’11 futures closed at $6.786/bu; off 11.25¢/bu and 17.75¢/bu lower than last Monday.

The DEC’11 contract closed at $6.744/bu; down 11.0 cents/bu and 2.75 cents/bu lower than last report.

Good crop weather and recent economic uncertainty pressured prices. Heavy rains fell on parts of the US Midwest over the weekend easing stress on the corn crop and seen as aiding pollination. However, hot, dry conditions persist in the southern tier of the Corn Belt. Weather news was considered good in the short term.

Corn stockpiles are at historically low levels so a good crop this year is very important to ease shortages. The current environment has kept corn prices trading 73 per cent higher than a year ago. Corn prices have pulled back nearly 15 per cent since reaching all-time highs in early June on supply concerns.

Users of grain are still nervous about weather threats because supplies are expected to reach 15-year lows. The on-going stress over the US budget had markets jittery and taking profits out of the market amid light volume. Volume was only about half of the average for the last 30 days. Exports are seen as neutral with USDA putting corn-inspected-for-export at 35.301 mi bu vs. expectations for 32-36 mi bu.

USDA confirmed sales of 105.156 tonnes (4.14 mi bu) of US corn to Japan for 2011-12 delivery. Technically speaking the right shoulder of a head-and-shoulder’s formation seems to be forming in the December 2011 contract. If the crop gets timely rains prices could make a measuring objective of $5.8339/bu in the couple of weeks. It may be a little too early to tell but if the 10-day moving average and the Relative Strength Index diverge downward December prices will make the measuring objective sooner rather than later.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed lower on Monday. The AUG’11 contract closed at $13.654/bu; off 14.75¢/bu and 20.0¢/bu lower than a week ago.

NOV’11 soybean futures closed 16.25 cents/bu lower at $13.720/bu and 14.25cents/bu lower than a week ago. Soybeans fell 1.2 per cent in the largest single-day drop since 30 June on improved crop weather and US debt worries.

The inability of the US Congress and Administration to agree on a budget deal kept investors wary of higher risk assets like commodities and concerned about the global economy. Several floor sources said the pits are just a jittery mess waiting on Washington.

Exports were disappointing at 5.158 mi bu vs. expectations for seven to nine mi bu. This put additional pressure on prices. Charts signal a continuing sideways tracking pattern with increased volatility. One would think this makes traders glad because they make money on volatility but the Washington debate on the debt ceiling has everyone staying on the side-lines.

WHEAT futures in Chicago (CBOT) closed down on Monday. SEPT’11 futures finished 3.75¢/bu lower at $6.884/bu and 1.0¢/bu lower than a week ago.

The DEC’11 contract closed at $7.290/bu; off two cents/bu but $1.108/bu higher than a week ago. Spillover from falling corn and soybeans pressured wheat prices. Some traders used the decline to cover short positions pulling prices back from daily lows near the close.

Good crop weather helped wheat producers in key wheat-growing areas of the northern US Plains. Russia and Iraq forecast lower imports on improved production. Uncertainty in global production indicates some nervousness over stocks the next six months. USDA put wheat-inspected-for-export at 22.44 mi bu vs. expectations for 20-24 mi bu.