7 December 2011

3 minute read

North America

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed up on Monday. DEC’11DA futures finished at $18.69/cwt; up $0.03/cwt. The JAN’12DA contract closed at $17.48/cwt; up $0.17/cwt.

Butter trading activity continued at a good clip. Domestic butter sales have been very good in 2011 amid strong manufactured dairy product exports. These good prices are spurring butter production.

Cheese prices were lower while milk futures were slightly higher; particularly in the front months. Current average futures prices for Class III milk are: three months out = $17.82/cwt; six months out = $17.47/cwt; nine months out = $17.37/cwt; and 12 months out = $17.29/cwt.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished down on Monday. The DEC’11LC contract closed at $118.900/cwt; down $3.000/cwt. JUNE’12LC futures closed at $123.575/cwt; off $2.475/cwt.

Traders expect cattle prices to decline ahead of the New Year even though recent strong sales in the cash markets show otherwise. A snowstorm in the plains this weekend failed to interrupt cattle markets.

Demand from packers is slowing as holiday orders have been filled. Late Monday USDA put the choice boxed beef price at $190.18/cwt; down $0.83/cwt from Friday. For Monday USDA placed the five-area average fat-cattle price at $124.87/cwt.

According to HedgersEdge.com, the average packer margin was placed at a negative $86.45/head based on the average buy of $125.56cwt vs. the average breakeven of $118.22/cwt.

FEEDER CATTLE at the CME closed down on Monday. The JAN’12FC contract settled at $144.300/cwt; off $2.775/cwt. APR’12FC futures finished at $147.450/cwt; down $2.625/cwt.

Compared to last week feedlot volume was firm. The Oklahoma City National Stockyards estimated receipts at 8,200 hd. vs. 5,962 last Monday and 9,176 hd. a year ago.

Compared to last week feeder steers were not well tested but a few sales saw $2.00/cwt lower cash prices; heifers were$2-$3/cwt higher. Calves were steady to weak but good for lighter weight calves.

The CME feeder cattle index was placed at $144.38; down $0.22 from the previous close.

CORN futures on the Chicago Board of Trade (CBOT) closed mixed on Monday with nearbys down and deferreds from December 2012 and beyond closing up. The DEC’11 contract closed at $5.802/bu; down 6.25¢/bu. MAR’12 futures closed at $5.910/bu; off 4.25¢/bu. The DEC’12 contract closed up 0.5¢/bu at $5.536/bu.

A firm US dollar, increasing prospects for Chinese corn crop while good prospective corn crop production in Argentina and Brazil also pressured prices. Competition from Australian wheat not good enough for bread but good enough for livestock is noted. Funds cut net bull positions in CBOT corn to a 17-month low last week.

Exports were supportive with USDA putting corn-inspected-for-export at 38.546 mi bu vs. estimates for 30-35 mi bu. Looks like a reversed head-and-shoulders shows

December 2012 corn bottoming out while showing rising tendancies to make the upside slope of the right side of the head formation. Upside potential is near $1.50/bu in the near term.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. JAN’11 soybean futures closed 9.5¢/bu lower at $11.262/bu. The MAR’12 contract closed at $11.364/bu; off 9.75¢/bu. NOV’12 futures closed at $11.484/bu; down 6.0¢/bu.

A firm US dollar buoyed by Eurozone economic woes and good prospects for the South American soybean crops pressured prices. Large speculators trimmed net bear positions decreasing exposure to volatility in the grain markets.

Exports were bearish with USDA putting soybeans-inspected-for-export at 31.649 mi bu vs. estimates for 40-45 mi bu. November 2012 soybean futures show confidence in higher prices for the 2012 crop.

WHEAT futures in Chicago (CBOT) closed down on Monday. The DEC’11 contract closed at $5.986/bu; off 13.5¢/bu. JULY’12 wheat futures finished at $6.424/bu; down 11.75¢/bu. Wheat lost early gains after losing support from outside markets.

Weak fundamentals left wheat exposed to US dollar volatility. Exports were not supportive with USDA putting wheat-inspected-for-export at 14.497 mi bu vs. estimates for 15-20 mi bu.

World demand was weak however, Saudi Arabia and Iraq did post substantial tenders for 2012 wheat. Chart signals indicate upside potential in July 2012 wheat.