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Weekly Roberts Market Report

27 July 2012

Michael T. Roberts
Extension Agriculture Economist,
Dairy and Commodity Marketing,
NC State University

US - Corn exports were bearish at 19.6 mb vs. the 33.3 mb needed to meet USDA’s demand projection pace, writes Michael Roberts.

DAIRY CLASS III futures on the Chicago Mercantile Exchange (CME) closed down on Monday with the exception of the December 2012 contract. JULY’12DA futures closed at $16.67/cwt; even with last Monday’s close. The SEPT’12DA contract closed off $0.02/cwt at $19.12/cwt. Lack of support from cheese markets and lower grain prices spilled over into milk futures. Moisture is needed for both commodity and grazing inputs. Fluid milk and milk product sales are down from this time last year. Butter stocks improved but prices seemed stuck. Class III futures were: 3 months out = $17.87/cwt; 6 months out = $18.44/cwt; 9 months out = $18.45/cwt; and 12 months out = $18.2038/cwt. It would be wise to buy feed hand-to-mouth while establishing a price floor under milk production three months out.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up Monday. The AUG’12LC contract closed at $118.600/cwt; up $0.650/cwt. DEC’12LC futures closed at $126.575/cwt; up $0.275/cwt. APR’13LC futures closed at $132.300/cwt; up $0.400/cwt. Expectations for tighter supplies lifted futures. A semiannual cattle-inventory report from USDA indicated sharply tighter supply for next year. Hot, dry conditions two years in a row have reduced the US herd. A seasonal decline in demand continues to hang over the market. Wholesale beef prices were bearish. According to HedgersEdge.com the latest packer margin was placed at a positive $4.50/hd.

FEEDER CATTLE at the CME finished mixed on Monday. The AUG’12FC contract closed $0.450/cwt lower at $135.650/cwt. NOV’12FC futures closed at $141.500/cwt; down $0.775/cwt. Feeder futures continued a 5-week loss trend on fears of climbing feed costs and weak beef demand. For Monday 7.23.12; estimated receipts at the closely watched Oklahoma City market were put at 5,350 head vs. last week’s 7,667 head and 8,271 head this time last year. Steers were steady-$3 lower while heifers were steady. Both steer and heifer calves were 2-3 lower. Demand was best for heavy stockers and feeders.

CORN futures on the Chicago Board of Trade (CBOT) finished down on Monday. The SEPT’12 contract closed at $8.140/bu; off 10.5¢/bu. The DEC’12 contract closed at $7.854/bu; down 10.25¢/bu. Profit taking and prospects for wet weather were supportive. Exports were bearish at 19.6 mb vs. the 33.3 mb needed to meet USDA’s demand projection pace.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed down on Monday. The AUG’12 contract closed at $16.984/bu; off 59.0¢/bu. NOV’12 futures closed at $16.222/bu; down 64.0¢/bu. Non-commercial position building pressured sell-off activity. Rain forecasts also pressured prices. Exports were neutral-to-bullish. Futures look bearish with so many long positions in place given there are only six reporting weeks left in the marketing year.

WHEAT futures in Chicago (CBOT) closed down on Monday. SEPT’12 wheat futures finished at $9.126/bu; off 30.5¢/bu. The JULY’13 contract closed at $8.104/bu; down 9.0¢/bu. CBOT wheat futures cut losses Monday following the corn market’s test of the upside. Both commercial and non-commercial bull position accumulation has driven prices. The market remains fundamentally bullish long term.

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