18 June 2008

5 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up on Monday. The JUNE’08LC contract closed at $96.725/cwt, up $1.150/cwt. AUG’08LC futures were up $1.175/cwt at $103.450/cwt. Speculative buying and expectations for a bullish Cattle-on-Feed report this Friday were supportive enough to overcome higher corn prices. Cash cattle were off Monday as USDA reported the 5-area price at $93.18/cwt, off $0.78/cwt from last week. USDA put the choice beef cutout at $157.05/cwt, up $0.62/cwt. Increased exports to other countries have taken up the slack of the South Korean markets. According to HedgersEdge.com, the average packer margin was $50.80/head vs. $37.70/head last Monday. Cash sellers should consider holding cattle until they are ready.

FEEDER CATTLE at the CME closed higher on Monday. AUG’08FC futures were up $0.500/cwt at $109.650/cwt. The SEPT’08 contract finished the day at $111.500/cwt, off $0.250/cwt. Despite higher corn prices, higher live cattle futures and higher cash feeders were supportive. The CME Feeder Cattle index for June 12 was placed at $109.82/cwt, up $0.150/cwt. It might be a good idea to hold feeders if you have good pasture.

LEAN HOGS on the CME were mixed on Monday. The JULY’08LH contract finished at $72.875/cwt, down $0.725/cwt and $0.500/cwt lower than a week ago. OCT’08LH futures closed up $0.075/cwt at $73.925/cwt and even with last Monday’s close. August/July spreading and higher feed costs were not supportive of July futures. Packer demand was expected to pick up on the reopening of the Tyson Food’s Columbus Junction, Iowa plant. According to HedgersEdge.com, the average pork plant margin was placed at a positive $3.70/head vs. a positive $3.50/head this time last week. USDA on Friday put the pork cutout value at $74.15/cwt, down $0.09/cwt. The latest CME Lean Hog index was off $0.63/cwt at $74.15/cwt. It is a very good idea to keep hog marketings current.

CORN on the Chicago Board of Trade (CBOT) finished mixed with nearbys up on Monday while the December ’09 and later contracts finished down for the day. The JULY’08 contract finished at $6.324/bu, up 0.6¢/bu but 24.8¢/bu lower than last Monday. The DEC’08 contract closed at $7.650/bu, even with a week ago but 79.8¢/bu higher than this time last week. Deferreds were off a range 3.4¢/bu – 20.0¢/bu pressured by lower crude oil futures. Continued wet weather held values for nearby contracts. The May ’09 corn contract rallied to $8.01/bu at one time. USDA placed the U.S. corn crop good-to-excellent rating at 57%, off 3% from last week’s rating and vs. 70% a year ago. Corn acres in Iowa were reported 9% flooded as well as another 8% that will need reseeding. Cash corn in the U.S. Midwest was reported steady to weak while spot corn in the U.S. Mid-Atlantic states ranged from -1.0¢/bu to 20.0¢/bu on short elevator storage and slow farmer selling. USDA placed U.S. corn-inspected-for-export at 38.186 mi bu vs. estimates for between 35-40 mi bu. A large volume of 393,204 futures and 95,865 options was reported with funds buying over 2,500 lots. The supplement to Friday’s CFTC Commitment of Traders report had large speculators increasing net bull positions by 39,300 lots to 219,041 contracts. It is still a good idea to have up to 60% of the ’08 crop priced. Speculate with the rest of the crop for now with this upside potential. It might be a good idea to price more new-crop corn at this time.

SOYBEAN futures on the Chicago Board of Trade (CBOT) ended down on Monday. Flooded corn acres still hold out hope for soybean plantings. The JULY’08 contract finished at $15.340/bu, off 26.0¢/bu from last week but 82.0¢/bu more than a week ago. Profit taking, the unwinding of July/November spreads, and fears that it will be hard to export soybeans on the Mississippi pressured prices. News that an Argentinean government crackdown on striking farmers aggravating conditions there was supportive. USDA placed soybeans in good-to-excellent condition at 56% vs. a 65% rating this time last year. The U.S. soybean crop was reported 84% planted, up 7% from last week but 10% off the average pace. USDA placed soybeansinspected- for-export at 12.722 mi bu vs. expectations for between 7-12 mi bu. U.S. soybean belt cash prices were steady all day. Cash soybeans in the U.S. Mid-Atlantic states ranged from 8.0¢/bu – 26.0¢/bu lower. Funds sold 2,000 + lots while the CFTC Commitment of Traders report had large speculators increasing net bull positions by 5,500 contracts to 96,098 lots. Having up to 60% of the ’08 crop priced is still a good idea.

WHEAT futures in Chicago (CBOT) closed down on Monday with the exception of two deferreds. The JULY’08 contract closed at $8.764/bu, off 5.4¢/bu from Friday but 88.0¢/bu higher than last Monday. JULY’09 wheat futures closed off 4.4¢/bu at $9.504/bu but 63.0¢/bu higher than this time last week. Profit taking, seasonal harvest pressure and weakening crude oil futures were not supportive of prices while soaring corn encouraged the buying of $8.00/bu wheat for feed. Wheat-inspected-for-export did not meet expectations coming in at 14.655 mi bu vs. estimates for between 15-20 mi bu. Iran will reportedly tender for 50,000 tonnes (1.8 mi bu) while Algeria bought 400,000 tonnes (14.7 mi bu). USDA placed the U.S. winter wheat harvest at 16% complete compared to the 5-year average of 19%. The U.S. winter wheat crop was rated 47% good-to-excellent condition while the U.S. spring wheat crop was placed in 67% good-to-excellent condition vs. a 63% rating last week. Supporting prices was news that Australia wheat is now estimated to harvest 24.3 mi tones (892.9 mi bu) or 3.2% lower than expected. Funds bought over 1,000 lots of CBOT futures amid a somewhat heavy volume of 92,297 futures and 12,212 options. The supplement to Friday’s CFTC Commitment of Traders report had large speculators increasing net bear positions by 2,000 contracts to 30,285 lots. If you haven’t sold the entire 2008 wheat crop by now it is a good idea to get it sold.