4 February 2009

3 minute read

North America

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) found strength on Monday. FEB’09LC futures closed up $1.900/cwt at $83.900/cwt; $1.55/cwt over a week ago. The APR’09LC contract closed at $86.825/cwt; up $1.725/cwt and $3.00/cwt higher than this time last week. Fundamental strength was found in Friday’s bullish Cattle Inventory data. Cash cattle reflected that strength trading better than expected on a weakening economy. The USDA 5-area average was placed at $80.11/cwt. USDA placed the choice boxed beef at $142.78/cwt, up $0.95/cwt. According to HedgersEdge.com, the average packer margin was lowered $4.80/head from last week to a positive $49.60/head based on the average buy of $80.88/cwt vs. the average breakeven of $84.56/cwt. It might be a good idea to sell cattle when ready while trying to price a couple months' near-term corn needs.

FEEDER CATTLE at the CME closed up on Monday. MAR’09FC futures were up $3.000/cwt to $93.000/cwt and $1.275/cwt over a week ago. The APR’09FC contract closed at $93.325/cwt; up $3.00/cwt. Lower feed prices rallied some contract limits. USDA’s bullish report also provided support to feeders even as cash feeders still showed weakness early Monday. The CME Feeder Cattle Index for 29 January was placed at $94.36/lb; down $0.34/lb. Advance feeder sales when ready. It also is a good idea to price a couple of months' near-term corn needs.

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday. MAR’09 corn futures closed at $3.704/bu; off 8.5¢/bu and 23.25¢/bu lower than a week ago. The JULY’09 contract closed at $3.924/bu; down 8.25¢/bu and 23.0¢/bu off last Monday’s finish. Weakening crude, continued economic struggles, hope for rain in Argentina amid mild showers there, and a firmer tone to the US dollar pressured prices. USDA placed exports at 25.288 mi bu; below weekly averages. Funds increased net bear positions fueling the selloff. Cash corn was steady-to-firm in most places across the US as farmers were unwilling to let go of 2008 corn in the bins. There is still some fundamental strength in corn but it is limited by bearish speculators. It might be a good idea to price up to 30 per cent of the 2009 crop. Buying a put option is not out of the question.

SOYBEAN futures on the Chicago Board of Trade (CBOT) closed off on Monday. MAR’09 soybean futures closed at $9.594/bu; down 20.5¢/bu and 49.75¢/bu lower than a week ago. The NOV’09 contract closed at $9.250/bu; off 20.0¢/bu while 20.5¢/bu off from this time last week. The same pressures on the corn complex were applied to soybeans. USDA placed soybeans-inspected-for-export at 33.542 mi bu. Fund activity was somewhat supportive adding to net bull positions. Cash soybeans were steady-to-firm amid slow farmer selling. An out of the money put may be considered. It might be a good idea to price up to 40 per cent of the 2009 crop now.

WHEAT futures in Chicago (CBOT) closed down on Monday. The MAR’09 contract closed at $5.636/bu; down 4.25¢/bu and 29.0¢/bu lower than this time last week. JULY’09 wheat futures finished off 4.0¢/bu at $5.886/bu and 27.5¢/bu lower than a week ago. Wheat started weak but rebounded on fears of a deteriorating crop in the US Plains. Demand has dropped off amid world economic woes. China’s drought in its wheat growing region coupled with news that Australia decreased wheat plantings was supportive to the market. USDA placed wheat-inspected-for-export at 11.95 mi bu. Pakistan was a major buyer. Cash wheat bids were steady to firm in most places. Large funds decreased net bear positions. It would be a good consideration to price up to 15 per cent of the 2009 crop at this time.